Suppose that a fixed-income portfolio manager (PM) holds: $10M (notional) of 5-year Treasury notes and $10M of 10-year Treasury notes.

Current prices are: $99.50 for the 5-year note and $100.50 for the 10-year note.

a. Which component of this person's position carries more interest-rate risk? Explain.

b. Approximate the change in total market value if the yield on the 5-year note were to increase by 4 bp and the yield of the 10-year note were to decrease by 2 bp.