EE PatronApr 21st 2011, 4:16:31
duration * change in interest rates = %age change in present value
=> (-1)*oldPV*(D/(1+oldIR))*(change in IR) = change in PV
nominal value doesn't change
note the duration in the equation should be the modified duration, not the macauley duration... so if you're given macauley duration as I assumed you were, divide the duration by (1+oldIR) - if not, just use D
something along those lines?
=> (-1)*oldPV*(D/(1+oldIR))*(change in IR) = change in PV
nominal value doesn't change
note the duration in the equation should be the modified duration, not the macauley duration... so if you're given macauley duration as I assumed you were, divide the duration by (1+oldIR) - if not, just use D
something along those lines?
Originally posted by Cerberus:
This guy is destroying the U.S. Dollars position as the preferred exchange for international trade. The Chinese Ruan is going to replace it soon, then the U.S. will not have control of the IMF