8. (a) Describe the two assumptions underlying the duration equation we learn in class. (b) Alexa notices that when the

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answerhappygod
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8. (a) Describe the two assumptions underlying the duration equation we learn in class. (b) Alexa notices that when the

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8. (a) Describe the two assumptions underlying the duration
equation we learn in class.
(b) Alexa notices that when the level of interest rates go up by
20 basis points, the value of her fixed income portfolio goes down
by 4%. What does this imply about the duration of her fixed income
portfolio?
(c) If the value of Alexa’s portfolio is $500,000, what is the
DVBP of her portfolio?
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