Which of the following instruments has the greatest change in price for a 1% change in the general level of interest rates?

The 3-month Treasury bill is a short-term instrument that matures in a very short period. Because of its brief duration, it is less sensitive to changes in interest rates compared to longer-term securities. As a result, the price of a Treasury bill will experience smaller fluctuations when interest rates rise or fall.

While the 10-year Treasury note does experience price changes due to interest rate fluctuations, its sensitivity is not as pronounced as that of a 30-year zero coupon bond. The note pays periodic interest, which reduces its overall duration and consequently its price volatility in response to interest rate alterations.

Callable municipal bonds can be redeemed by the issuer before maturity, which adds an element of uncertainty regarding cash flows. This feature generally reduces the bond's sensitivity to interest rate changes compared to zero coupon bonds, as the potential for early redemption limits their price volatility.