PV01 Is a Measure

question 18

Multiple Choice

PV01 is a measure:

• A)of how much a bond's price will decrease in response to a one-basis-point decline in a bond's duration.
• B)that determines how secure an investor should feel about a perfectly hedged portfolio.
• C)of the rate of change of price with respect to yield or the percentage change in price for a parallel shift in yields.
• D)of how much a bond's price will increase in response to a one-basis-point decline in a bond's yield to maturity.

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Definitions:

Growth

The process of increasing in size, number, value, or strength.

Safety

The condition of being protected from or unlikely to cause danger, risk, or injury.

Suggest Changes

The act of proposing adjustments or modifications to ideas, processes, or behaviors to improve or resolve a situation.

Hierarchy of Needs

A psychological theory proposed by Abraham Maslow that is often depicted as a pyramid with physiological needs at the base, ascending through safety, love/belonging, esteem, to self-actualization at the top.