# Quick Approximation of Price Value of a Basis Point (PVBP)

We know that the Price Value of a Basis Point is the change in the value of a bond due to a 1 basis point change in the interest rates.

You can use a spreadsheet to calculate the PVBP.

However, if you want a quick approximation of the same, you can use your financial calculator, or the PV formula in excel and perform the following steps:

Assume that you want to calculate the PVBP of a \$1 million, 10 year bond, with a coupon of 6%.

N = 10

r = 6%

PMT = 60,000

FV = 1,000,000

We will now calculate the PV of the bond, using r as 6% and 6.01%.

The PV at 6% is 1,000,000, and the PV at 6.01% is 999,264.34.

The BPV, therefore, is the difference between the two.

PVBP = 735.66

### You may find these interesting

Value at Risk (VaR)
### Define the concept of Value-at-Risk (VaR) Value-at- Risk (VaR) is a general measure of risk dev...
Accelerate your finance career with cutting-edge data skills.
Join Finance Train Premium for unlimited access to a growing library of ebooks, projects and code examples covering financial modeling, data analysis, data science, machine learning, algorithmic trading strategies, and more applied to real-world finance scenarios.
I WANT TO JOIN
JOIN 30,000 DATA PROFESSIONALS

## Free Guides - Getting Started with R and Python

Enter your name and email address below and we will email you the guides for R programming and Python.

# Data Science in Finance: 9-Book Bundle

Master R and Python for financial data science with our comprehensive bundle of 9 ebooks.

## What's Included:

• Getting Started with R
• R Programming for Data Science
• Data Visualization with R
• Financial Time Series Analysis with R
• Quantitative Trading Strategies with R
• Derivatives with R
• Credit Risk Modelling With R
• Python for Data Science
• Machine Learning in Finance using Python

Each book comes with PDFs, detailed explanations, step-by-step instructions, data files, and complete downloadable R code for all examples.