Analyze Bond Pricing Factors
Series 65 · Flashcards · Application
SERIES 65 · FLASHCARDS
Card 1
of 5
0 got it
0 to review
Current
Got it
Still learning
Not seen
QUESTION
Which bond is more price sensitive to yield changes:
D
=
7
D=7
D
=
7
or
D
=
3
D=3
D
=
3
(all else equal)?
QUESTION
Using duration, estimate
Δ
P
P
\frac{\Delta P}{P}
P
Δ
P
if
D
=
8
D=8
D
=
8
and
Δ
y
=
−
0.005
\Delta y=-0.005
Δ
y
=
−
0.005
.
QUESTION
Compute the credit spread if
y
bond
=
6
%
y_{\text{bond}}=6\%
y
bond
=
6%
and
y
benchmark
=
4
%
y_{\text{benchmark}}=4\%
y
benchmark
=
4%
.
Tap to flip before you grade
ANSWER
2
%
2\%
2%
(or
200
200
200
basis points). Subtracting the benchmark yield from the bond yield gives
6
%
−
4
%
=
2
%
6\% - 4\% = 2\%
6%
−
4%
=
2%
, equivalent to 200 basis points.
Swipe → got it · swipe ← still learning
Got it
Still learning
Flip Card
Previous card
Next card