crismurray

[crismurray]

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You are correct. The calculation provided in the explanation is incorrect, and it should indeed be 3.001 as a 1 basis point (0.01%) increase in yield. Let’s recalculate the PVBP using the correct values according to uno online guides:

PVBP = initial price – price if yield changed by 1 bps

Initial price:
FV = $1,000
PMT = $50 (semiannual coupon payment)
N = 14 (number of periods)
I/Y = 3% (yield)
CPT PV = $1,225.92

Price if yield changed by 1 bps:
FV = $1,000
PMT = $50
N = 14
I/Y = 3.001% (yield increased by 1 bps)
CPT PV = $1,225.28

PVBP = $1,225.92 – $1,225.28 = $0.64

Therefore, the correct PVBP for the bond is closest to $0.64.

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