The change in a bond price for a unit change in the prevailing yield is calculated as $198.54. What is the price value of a basis point on this bond?
A) $0.019854
B) $0.19854
C) $1.9854
D) $19.854

Question

Quizplus · Accepted Answer

The price value of a basis point is calculated by dividing the change in bond price by the change in yield in basis points. In this case, the change in bond price is $198.54 and the change in yield is 1 basis point (0.01%). Therefore, the price value of a basis point is $198.54 / 0.01% = $19.854.

The Change in a Bond Price for a Unit Change