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Glite Dictionary
🚀 Starting with little 📈 Building yield curve 🔄 Resampling data 💻 Starting a system
bootstrapping

bootstrapping

9.6
A method that finds interest rates for different times from bond prices one step at a time
  • noun
  • /ˈbuːtstræpɪŋ/
  • Specialized
translation icon : bootstrap
  • The bootstrapping process helps in calculating spot rates from the prices of various bonds.

Examples

  • By employing bootstrapping, analysts can derive interest rates for different maturities from bond prices.

  • Economists often use bootstrapping to create a comprehensive yield curve based on market data.

  • The bootstrapping interval is narrower than the traditional interval.

    Academic text (1990)

  • GSC is a more complex bootstrapping method specifically designed to calculate probabilities of overlap for sets of genomic features.

    Blog text (3)

Surface Forms

bootstrapping singular
bootstrappings plural

Morphology

bootstrapping = bootstrap (semi-transparent) = bootstrap + ing

The financial technique is named for iterative, step-by-step construction, so the link to 'bootstrap' is understandable but the specific technical procedure is specialized.

Etymology

Bootstrapping comes from the old image of pulling yourself up by your bootstrap — the small strap on a boot, a phrase that meant 'to pull yourself up'. In finance, bootstrapping is the step-by-step way to build a yield curve from bond prices, like using small pulls to reach the full curve.