A bank owns a portfolio of bonds whose value P(r) depends on the interest rate r (measured in percent; for example r=5, means a 5% interest rate). The bank's quantitative analyst determines that P(5)=120000 , dp/dr |r=5=−40000, d^2/dr^2 |r=5=45000. In finance, this second derivative is called bond convexity. Find the second Taylor polynomial of P(r) centered at r=5 and use it to estimate the value of the portfolio if the interest rate moves to r=5.5%.

(Use decimal notation. Give your answer to two decimal places.)
If the interest rate moves to r=5.5%, the value of the portfolio would b

Question

A bank owns a portfolio of bonds whose value P(r) depends on the interest rate r (measured in percent; for example r=5, means a 5% interest rate). The bank's quantitative analyst determines that P(5)=120000 , dp/dr |r=5=−40000, d^2/dr^2 |r=5=45000. In finance, this second derivative is called bond convexity. Find the second Taylor polynomial of P(r) centered at r=5 and use it to estimate the value of the portfolio if the interest rate moves to r=5.5%. 

(Use decimal notation. Give your answer to two decimal places.) 
If the interest rate moves to r=5.5%, the value of the portfolio would b

anonymous · Answer

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