What does DV01 measure in fixed income risk management, and how is it used?

• A. It measures the dollar change in a bond’s value for a 1 basis point parallel shift in the yield curve; used to quantify interest-rate risk, size hedges, and compute duration-adjusted P&L.
• B. It measures the change in price for a 100 basis point shift; used to estimate convexity.
• C. It measures the Macaulay duration of the portfolio.
• D. It measures sensitivity to credit spread changes.

Answer: (A)