Question: Describe the two assumptions underlying the duration equation we learn in class. Alexa notices that when the level of interest rates go up by 20

Describe the two assumptions underlying the duration equation we learn in class.

Alexa notices that when the level of interest rates go up by 20 basis points, the value of her fixed income portfolio goes down by 4%.

What does this imply about the duration of her fixed income portfolio?

If the value of Alexa's portfolio is $500,000, what is the DVBP of her portfolio?

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The duration equation we learn in class assumes two things Linear Relationship The first assumption is that there is a linear relationship between changes in interest rates and changes in the value of ... View full answer

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