neil1234

Schweser practice exam 3, question 5, page 126-7:

Step 2 (of 5):

Correct answer is "Impose an upward parallel shift in the on-the-run Treasury yield curve of 100 bps."

Incorrect answer is "Add 100 basis points to each of the 1-year rates in the interest rate tree to derive a modified tree."

Why is the incorrect answer incorrect? Aren't we adjusting the 1 year rates in the tree?

- Robert