Duration problem

The answer’s B alright, thanks! Thank God I don’t get an email notification for every reply, otherwise that would be 20 replies in an hour haha

cpk - they are related. most bonds, including this one, have positive convexity, which causes the change in price up to be more than change in price down. therefore you have to calculate both changes and average them. calculating only the price change up, for example, will cause you to get a duration that is higher than the actual duration. in fact, they will probably have that wrong answer as an answer choice

does this also work for the TI-BAII plus, not professional? because i’m not seeing duration anywhere here.

ryan, we were talking about how to calculate duration, and how to do it easier, and the easiest way is using the BAII Plus Professional that calculates it straight, no need for anything else than the correct inputs. Nobody here implied that we should calculate duration using only upswings or downswings in the interest rate.

clafleur, nope, it doesn’t. With a BAII Plus calculate prices, as CPK did, and plug them into the formula.

map, i misinterpreted: “And once you discovered what’s the % change in price for a certain shock, other than 100bp, the calculus of the % change in price is symmetrical.” i thought you meant the price change up is “symmetrical” with price change down for a give change in yield

nooo, no no no:) we all know about convexity:))