Concept explainers
a.
To compute: The percentage change in the price of 10-year U.S. Treasury assuming a 50-basis-point change in the yield on the 10 year U.S. Treasury.
Introduction:
Basis point: It is supposed to the 1/100th of a percent or a value which is equal to 1/1000th. The values related to fixed income markets are denoted in terms of basis points.
b.
To compute: The percentage change in the price of K.C. bond using the regression equation. Assuming a 50-basis-point change in the yield on the 10 year U.S. Treasury.
Introduction:
Regression equation: A regression equation depicts the dependent relationship of two or more relationships. By using this equation, one can compute the extent of dependence between two variables.
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