Value Of A Basis Point - Monroe 3180 User Manual

VALUE OF A BASIS POINT

The VAL key provides two calculations which combine several TRADER II functions to obtain the
movement of either price or yield. VAL calculates the difference in dollar price, if the yield moves by .05%
(Codes 0 – 4 and 6) or if the discount rate changes by .01% for Code 5. DISPLAY, VAL calculates the
difference in yield in basis points if the price changes by 1/32
The VAL key also allows you to enter other spread values.
VAL accepts number of basis points (up to 99), and calculates the difference in price, between
the dollar price and the dollar price at the yield plus the entered basis point.
DISPLAY, VAL accepts the number of 32
between the yield and the yield at the dollar price plus the entered 32
EXAMPLE: A 6.5% Agency Bond maturing on November 24, 2010 is sold to yield 7.75%. Find the
dollar price and compute the dollar movement if the yield changed by 5 basis points.
ENTER
0
6.2487
Set the FED/MUNI switch and status line as follows:
FED/MUNI SWITCH to MUNI
ENTER
6.5
11.2410
7.75
Now compute how much the yield will change if the bond moves 1/32 of a point.
ENTER
PRESS RESULTS DISPLAYED
CODE Security Code 0.
SETTLEMENT Settlement Date Wed. 06-24-1987
DATE
C=0 PER 30/360 SEMI 06-24-87 MATURITY
PRESS RESULTS DISPLAYED
COUPON Coupon Rate 6.500%
MAT Maturity Date Wed.
DATE
END
TO Price
PRICE
VAL VAL .05 = 4.780
PRESS RESULTS DISPLAYED
DISPLAY VAL 1/32
VAL
nd
of a point.
nds
, and calculates the difference in basis points
11-24-2010
86.580(M)
nd
0.30 Basis Points
MONROE TRADER II
nds
(thirty second of a point).
23