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 Treas...

The problem here is in the definition of price volatilit ...

James Smith and Donald Robertson are assistant portfolio managers for Micro Management Partners. In a review of

Question:

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

James Smith and Donald Robertson are assistant portfolio managers for

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?

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...