Three Treasury positions in one composite dealer's inventory, repriced under a parallel shift and then a twist, fill the MT481 bond market problem set for Unit 5. Searches like "mt 481 unit 5 assignment example", "mt481 unit 5 sample" and "mt481 unit 5 example" land here.
What a finished MT481 Unit 5 bond market problem set looks like
Five problems over four pages, one position table carried throughout. The dealer holds 300 million face of a two-year note with a 4.00 percent coupon, 150 million of a ten-year at 4.25 and 60 million of a thirty-year bond at 4.50, each bought at par. Problem one lifts every yield 50 basis points: prices fall to 99.054, 96.056 and 92.273, losses of about 2.84 million, 5.92 million and 4.64 million. Problem two computes each position's value of a basis point, 57,116, 121,169 and 98,247 dollars. Problem three sets duration estimates against full repricing; on the long bond the estimate overstates the fall by 0.46 points. Problem four applies a twist, the two-year down 25, the ten-year up 10 and the thirty-year up 40, for a net loss near 3.53 million. Problem five sizes an offset.
How a MT481 Unit 5 example is structured
Each problem states its inputs, shows the formula with one position substituted in full and then tabulates the other two, so the method is visible once and the results are easy to compare. Pricing uses semiannual discounting throughout, stated at the top. The value of a basis point is computed by repricing a basis point either side rather than from a rounded duration, which is why the thirty-year line, a fifth the size of the two-year, carries 1.7 times its sensitivity. The duration comparison is kept brief and ends on convexity, the reason full repricing loses less than the linear estimate. The twist problem shows a book gaining on one line while losing on another, and problem five asks how many dollars of two-year notes the dealer would have to short to neutralize each dollar of long-bond exposure: about 8.6.
One book, three maturities
Two-, ten- and thirty-year Treasuries bought at par, 510 million of face in total, held overnight as customer inventory.
Half a point on every yield
Losses of about 2.84, 5.92 and 4.64 million, a combined markdown near 13.39 million by the close.
Value of a basis point
57,116 dollars on the two-year line, 121,169 on the ten and 98,247 on a long bond one-fifth the two-year's size.
Linear estimate, curved reality
Duration predicts an 8.19 point fall on the thirty-year; repricing gives 7.73, and convexity accounts for the gap.
A twist and an offset
Short yields down 25 and long yields up 40 produce a net 3.53 million loss, and each long-bond dollar needs about 8.6 two-year dollars against it.
Where marks go in MT481 Unit 5
Repricing carries most of the credit in a set like this one, and a common failure applies the rate change to the coupon instead of the yield, which leaves prices unchanged and every later answer wrong. Annual discounting on semiannual Treasuries is a quieter error that shifts prices by a few hundredths. Graders often check whether position size enters the loss: a price change per 100 of face is not a dealer's loss until multiplied by holdings. Duration estimates presented as exact, with no comparison to full repricing, miss the convexity point on the long bond. The twist problem draws comment when its total is reported without the offsetting gain on the two-year line. Explanations that stop at arithmetic, never saying why a dealer holding inventory for customers faces this exposure at all, answer only part of the prompt.
Get a MT481 Unit 5 example written to your instructions
Some Unit 5 prompts give a single bond and a rate change; others hand over a list of securities. Either set, sent with its rubric, becomes a first MT481 problem set at no cost, every price computed in full, conventions stated and losses sized to the positions given. It arrives in 24-48h.
MT481 Unit 5 questions, answered
Why frame bond problems around a dealer?
Because most bond investors trade against a dealer, which buys when customers sell and holds the securities until another buyer appears. That inventory is exposed to exactly the rate moves the unit studies. If your prompt uses a single investor or a fund instead, the arithmetic is identical; only the question of who bears the loss changes.
Do I have to compute the value of a basis point?
Not always, though it is the measure trading desks actually use and it makes positions of different sizes comparable. It can be found by repricing one basis point up and down and halving the difference. Showing one position worked that way, with the others tabulated beside it, usually satisfies graders looking for method.
How precise should prices be?
Three decimals per 100 of face is standard for classroom work, and dollar losses can be rounded to the nearest thousand once multiplied by position size. State the compounding convention once, semiannual for Treasuries, and keep it throughout. Rounding a yield or a discount factor early is what usually produces answers that differ from the key.