Exercise

# Calculate PV01 of a 10% bond

You can calculate the PV01 by calculating the value of a bond and the value of the same bond with a one basis point change in yield. In this exercise, you will calculate the PV01 of a bond with a $100 par value, 10% coupon, and 20 years to maturity assuming 10% yield to maturity.

Use the `bondprc()`

function you created in Chapter One to value the two bonds. This function has been preloaded in your workspace. Make sure the result is a positive number.

Instructions

**100 XP**

- Calculate PV01 using the formula you saw in the video. Remember that PV01 is equivalent to the value of one bond minus the value of the other bond. To calculate this, you should use two calls to
`bondprc()`

. - To get the correct answer, you should subtract the bond with the YTM of 10.00% from teh bond with the YTM of 10.01%.
- Also remember to take the
`abs()`

of this formula to ensure your output is positive.