Math and Calculation

Reading some of other post, I feel this maybe a good post for some math-related topics. Let’s forget about if the material is explicitly or implicitly requried by LOS to “calculate”. Put some calcuation that you feel you want to know before you walk into that exam room…I will start. Method for DD rebalancing. Two method 1)Rebalance using all bonds in the portfolio 2) Using a control bond position. Calcuating the effective interest rate for borrow/lender when hedged using a interest rate option. Steps: 1)Calcuate option cost. 2)Find out option payoff 3)Calcuate effective borrowing/lending rate. Contingent Immunication. What is the new Dollar cushion if market rate changes. up/down.