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NEW QUESTION: 1
A portfolio consists of 2 bonds:
Bond | Maturity | Coupon | Duration | Proportion in Portfolio
Bond A | 10 years | 8% | 6.7 | 60% Bond B | 7 years | 5.2% |3.9 | 40%
If the yield on Bond A increases by 54 basis points and the yield on Bond B decreases by 79 basis points, compute the percentage change in portfolio value.
Percentage change in portfolio = wA DA (*rA) + wB DB (*rB)= 0.6 * (-6.7) * (0.0054) + 0.4 *
(-3.9) * (-0.0079) = -0.938%.
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