APV Sensitivity with Respect to Interest Rates Fluctuations
Part of the Contributions to Management Science book series (MANAGEMENT SC.)
The aim of this paper is to provide some simple relations in order to evaluate how much the yield is influenced by a change in the internal rate of return in a contract of division into instalments. These relations can be used to get some hedging results (see, i.e., Platt (1986)). I consider three parameters useful to describe the yield of the investment:
Total amount of interests;
Net Present Value;
Adjusted Present Value.
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© Physica-Verlag Heidelberg 1994