Calculate the requested measures in parts (a) through (d) for bonds A and B (assume that each bond pays interest semiannually)

	Bond A	Bond B
Coupon	8%	9%
Yield to maturity	8%	8%
Maturity (years)	2	5
Par	$100.00	$100.00
Price	$100.00	$104.055

(a) What is the price value of a basis point for bonds A and B?

(b) Compute the Macaulay durations for the two bonds.

(c) Compute the modified duration for the two bonds.

(d) Compute the convexity measure for both bonds A and B

(e) An investor bought one share of bond A and one share of bond B. What is the Macaulay duration of the investors bond portfolio?

Solve only (d) and (e) part