1.What is the price change factoring in both modified duration and convexity of a 25 bps increase in rates for a 5 year, 3.5% coupon semiannual pay bond with a YTM currently at 3.7%?

($9.19)

($10.19)

($11.19)

($8.19)

2.A portfolio holds four bonds with durations of 7.3, 4.2, 3.1, and 12.2 with market values for each in the portfolio at $5 million, $3 million, $3 million, and $2 million, respectively. What is the duration of the bond portfolio?

4.87

5.37

6.37

5.87