The correct answer is: 0.1645
The volatility of the bond is given by:
BOND= duration x 
INTEREST RATE
= 4 x 0.025% = 0.1%
The volatility of the swap is the same as the volatility of the underlying bond,
i.e. 
SWAP = 0.1%
The 5% value at risk (VAR) is
VAR SWAP= 1.645 x volatility of the swap
= 1.645 x 0.1 = 0.1645
