1. Suppose there are two securities, A and B. Security A is a 3 year security, interest only, coupon of 9 percent, par value of $10,000. Security B is also a 3 year security, priced at $10,000, and 3 payments of principal and interest of $3,950.55 are to be received annually at the end of each year.

A.What is the yield to maturity on each of these securities?

B.What is the weighted average duration (D) for each of these securities?

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