## PRM - MTM vs Yield

j.himanshi
Posts: 6
Joined: Wed Sep 03, 2014 6:48 am

### PRM - MTM vs Yield

In market risk what is MTM and how MTM record losses when yield increases above at par by 10% and vice versa. What is the relation

edupristine
Finance Junkie
Posts: 981
Joined: Wed Apr 09, 2014 6:28 am

### PRM - MTM vs Yield

The accounting act of recording the price or value of a security, portfolio or account to reflect its current market value rather than its book value.
For eg assume that 100 shares of a hypothetical stock ABC are bought at \$50 on Day 1 and another 200 shares are purchased on Day 2 at \$52.00.
Now, assume that the closing prices for XYZ on Days 1 and 2 are \$50.50 and \$51.50.
The MTM calculations are as follows:
Day 1
Transaction MTM - \$50.00 ((50.50 – 50.00) * 100 )
Prior Period MTM - \$0.00
Total MTM - \$50.00
Day 2
Transaction MTM - (\$100.00) ((51.50 – 52.00) * 200 )
Prior Period MTM - \$100.00 ((51.50 – 50.50) * 100 )
Total MTM - \$0.00

Total MTM : \$ (50 +0) = \$50