Present value of a basis point (PVBP) is one of the ways to quantify the risk of a bond, and it measures:

Present value of a basis point (PVBP) is one of the ways to quantify the risk of a bond, and it measures:
A . The change in value of a bond when yields increase by 0.01%.
B . The percentage change in bond price when yields change by 1 basis point.
C . The present value of the future cash flows of a bond calculated at a yield equal to 1%.
D . The percentage change in bond price when the yields change by 1%.

View Answer

Answer: A

Explanation:

Present Value of a Basis Point (PVBP) measures the change in the value of a bond when the yield changes by one basis point (0.01%). This measure helps quantify the interest rate risk of a bond by indicating how much its price will fluctuate with small changes in yield.