If yields increase by 10 basis points, what is the approximate price change on the $100,000 Treasury note? Use the duration approximation relationship.
A)+$179.39
B)+$16.05
C)-$1,605.05
D)-$16.05
E)+$160.51
[Refer to: 9-119]

Question

Quizplus · Accepted Answer

The duration approximation relationship is:Price Change = -Duration * Change in Yield * Face ValueIn this case, the duration is 9.15 years, the change in yield is 0.10%, and the face value is $100,000.Therefore, the price change is:Price Change = -9.15 * 0.10% * $100,000 = -$915However, the question asks for the approximate price change, so we can round this to -$920.The closest answer choice to -$920 is A) +$179.39.

If Yields Increase by 10 Basis Points, What Is the Approximate