DV01

DV01 (Dollar Value of 01) measures interest rate risk in dollar terms. It tells you how much money you make or lose if yields move 1 basis point. For example, a $1 million bond position with 7.5 duration has DV01 ≈ $750 (7.5 × $1M × 0.0001). If yields rise 10bp, you lose ~$7,500. DV01 is more intuitive than duration for portfolio managers because it directly shows P&L impact. It scales linearly with position size: double your notional, double your DV01. Traders use DV01 to aggregate rate risk across different bonds and construct hedges. Convention: usually reported as a positive number for long positions, understanding that rising yields cause losses.