You own a bond portfolio worth 206195 you estimate that, Ask an Expert

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You own a bond portfolio worth ?$206,195. You estimate that your portfolio has an average? yield-to-maturity of 5.35.3?% and Macaulay Duration of 5.35.3 years. If interest rates went down one percentage point and your? portfolio's yield-to-maturity changed by the same? amount, what would be the new value of your bond? portfolio?

?(Hint: Not covered in the eText. Check your class notes and the TopHat note titled? "Bond risk and? duration".

Step? 1: Compute DV01 as the? portfolio's MacD divided by 1 plus the? portfolio's YTM, multiplied by the value of the portfolio and divided by 100.

Step? 2: Compute the change in the? portfolio's value based on its starting value given in the question and the estimated change in value from Step? 1).

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92760212

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