What's the rule to find the change in basis points in decimals for the duration calculation?
D = ( P if yields down - P if yields up ) / (2*initial price* change in yield in decimals)
In one question, the change in basis points was 100 and the change in yield in decimals was said to be : 0.001
In another, the basis point change was 60, and the answer in the formula used 0.006 as change in yield in decimal.
As far as I'm concerned, they didn't do the same conversion there...... yet the answers work ( I checked their calculations)....
so what's the deal? how do I turn basis point change into decimal yield change in order to use that formula??
thanks!
D = ( P if yields down - P if yields up ) / (2*initial price* change in yield in decimals)
In one question, the change in basis points was 100 and the change in yield in decimals was said to be : 0.001
In another, the basis point change was 60, and the answer in the formula used 0.006 as change in yield in decimal.
As far as I'm concerned, they didn't do the same conversion there...... yet the answers work ( I checked their calculations)....
so what's the deal? how do I turn basis point change into decimal yield change in order to use that formula??
thanks!