b. A bond portfolio consists of the following three annual coupon payment bonds. The par value is $1000. Bond Maturity Market Price (years) Value (8) (5) AX 13 2,167,600 1,083.8 BZ 15 2,048,200 1.024.1 CY 1.436,250 957.5 Coupon (%) 8.50 7.88 7.50 Yield-to Modified Duration Maturity (%) (years) 7.47 7.94 7.60 8.71 7.90 10.72 24 i. Determine the weight of each bond in the bond portfolio (3 marks) ii. Calculate the bond portfolio's modified duration. (2 marks) c. Which bond should be the most price volatile? Explain. (3 marks) i. 5-year maturity, 2% coupon. ii. 8-year maturity, 2% coupon. iii. 5-year maturity, 6% coupon. iv. 8-year maturity, 6% coupon. 2