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Let us express the process of calculating approximate percentage price change for a given change in yield and a given duration using the following formula:
Approximate percentage price change = - duration × Δy ×100 ...Eq. (2)
As an inverse relationship exists between the price change and yield change, duration is preceded by a minus sign.
For example, let us take a 20-year bond with 8.5% coupon rate, currently trading at Rs.115.89 whose duration is 10.22. The approximate percentage price change for a 20 basis point increase in yield (i.e., Δy = +0.002) is
Approximate percentage price change = -10.22 × (+0.002) ×100 = -2.044%
What is a financial ratio? A financial ratio is a number that denotes the value of one financial variable that is relative to another. Put much more simply, a financial ratio
Start-Up Financing Capital provided to companies which have been in operation for less than one year to facilitate all phases of bringing their product to market.
Do you provide help in college level Managerial Finance?
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