- This topic has 7 replies, 3 voices, and was last updated 11 years ago by
.
- Posts
Hi
When calculating the duration for bonds, do we need to first calculate the IRR?
In bpp qu 34, the solution uses the IRR to calculate duration number of years, but when I used the spot yield curve PV’s as my basis for duration calculation it gave me almost the exact same answer.
Thanks
No – you do not need the IRR first.
(I cannot comment on the BPP question because I do not have their book)
Dear Mr Moffat,
I have the same confusion as Brian. But, as i understand, both YTM ( based on IRR type calculation), and spot yeild curve represent required rate of return by investors. Therefore, they are expected to return the same duration.
Therefore, either of them is correct, right?
That is true, but it is not as though you need to calculate one before calculating the other (which is what I understood Brian to be asking).
Yes, Mr Moffat, i often use spot yeild curve which is clearly stated by the context.
Thank you so much for your help! Mr Moffat.
- You must be logged in to reply to this topic.