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Consider the following cashflows: $110 at year 1,$220 at year 2,$300 at year 3,$400 at year 3,$500 at year 5. Assume the following zero coupon rates 1% for year 1, 2% for year 2, 3% for year 3,4% for year 4,5% for year 5.
1. What is the MTM of the cashflows?
2. Assume the price of these cashflows is 1100$ what is the spread of the yield curve to match this price.
3. What is PV01/duration/convexity of the cashflows ?
4. Compute the sensitivity of the MTM of the loan with respect to a parallel shift of the yield curve or a widening of the yield curve (ie 1Y moves by 1bps,5 year moves by 5bps).
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