Question

Suppose that the 10-year interest rate opens the day trading at 5.4578%. At the end of the day you read on the news that the 10-year interest rate closed the day 2 basis points lower. At what level did the 10-year interest rate closed the trading day?

A) 5.4378%

B) 5.2578%

C) 5.4558%

D) 3.4578%

Answer 1

100 basis points = 1%

so 2 basis points = 2/100 =0.02%

so closing 10 year interest rate = 5.4578% - 0.02% = 5.4378%

Answer : A) 5.4378% [Thumbs up please]