Clarification on Shocking Up vs. Shocking Down Yield

gargi.adhikari

Active Member
Hi in reference to Tuckman Chapter 4:-
Shocking Up vs. Shocking Down Yield :-

There are instances in Tuckman -Chapter 4, where it is mentioned that Shock Up Yield by 1 bps means , new Yield= ( Initial Yield - 1bps). if Initial Yield = 5 %, then New Yield = ( 5 % - 1bps ) = 4.99 %

Question/clarification around this:-
With Shock-Up, should we not add the 1bps to the Yield instead of subtracting ? So, in this case, New Yield with 1 bps Shock Up = ( 5 + 1bps ) = 5.01 % instead of a 4.99 %..?
 
Last edited:

ShaktiRathore

Well-Known Member
Subscriber
Hi gargi,
Yes in shock up we should add the 1bps to the Yield instead of subtracting.And in shock down we should subtract the 1bps to the Yield.
thanks
 
Top