(It could be easier to set up the problem in Excel to answer the following questions.) Calculate the duration and volatilities of a security that has the following cash flow. Interest rate is 8% Period 1: $20 Period 2: $20 Period 3: $120

a) What is the PV of payment in period 1? $

b) What is the PV of payment in period 2? $

c) What is the PV of payment in period 3? $

d) What is the total PV? $

e) What is the proportion of PV of periods 1, 2 and 3 of the total PV, in the same order? , , (Use 4 decimal places. Remember they should add up to 1.)

f) What are these weighted proportions weighted by time, in period 1, 2, and 3? , , (Use 4 decimal places.)

g) What is the duration (Macaulay duration) of this security (sum of the values in part d)? (Use 4 decimal places. You can verify your answer by using Excel or a financial calculator.)

h) What is the security volatility (modified duration)? (Use two decimal places. You can verify your results using Excel or financial calculator.)