Exam continued on next page: Bond Duration and Volatility ( 25 points possible). A) Calculate the duration and volatility of Security A and Security B. The cash flows for Security A pays $160, while the cash flows for Security B pays $300, cach period for a total of four years. The going interest rate for both securities is 12%. (Fecl frec to use excel, and embed as an object, or do by hand and scan or take picture and paste onto a word doc) B) What is the difference in duration between both securities A and B? How would the price of each respond to a 1% change in Yield to Maturity, in cither direction (increase or a decrease)? Remember how interest rates move usually in relation to price of bonds, i.e. inverse