In the image below, why do we use 8% rather than just 10bps as the change like we used for modified duration when there was a change in yield?
Becuase the chnage has a different effect on each bond. The spread is not moving by 10bp for each bond but 8%
Not 100 to 110 and 300 to 310
but
100 to 108 and 300 to 324
Got it, thank you!