Question: James Smith and Donald Robertson are assistant portfolio managers for Micro Management Partners. In a review of the interest rate risk of a portfolio, Smith

James Smith and Donald Robertson are assistant portfolio managers for Micro Management Partners. In a review of the interest rate risk of a portfolio, Smith and Robertson discussed the riskiness of two Treasury securities. Following is the information about these two Treasuries:

Smith noted that Treasury bond B has more price volatility because of its higher modified duration. Robertson disagreed noting that Treasury bond A has more price volatility despite its lower modified duration. Which manager is correct?

Bond Price Modified duration 90 50

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