Bond-X has 2 years to maturity, a yield-to-maturity of 5%, face value of $1,000, and a coupon rate of 6%. The coupons are paid semiannually. Bond-Y has 4 years to maturity, a yield-to-maturity of 5.8%, and face value of $1,000. Bond-Y pays no coupons. Assume your current Fixed Income Portfolio consists of 50 Bond-Xs and 25 Bond-Ys. Use continuous compounding in all your calculations.

(a) What is the current market value of your Fixed Income Portfolio?

(b) What is the duration of each Bond-X?

(c) What is the duration of each Bond-Y?

(d) Assume the interest rates (all yield-to-maturities) decrease by 0.7% for all bonds in the next hour. Use durations of Bond-X and Bond-Y to estimate the percentage change of your Fixed Income Portfolio?