This is an semiannually bond which is mean one half the yield and pmt, also double the period 

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

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

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

2. 4. Answer the questions below for bonds A and B.

	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) Calculate the actual price of the bonds for a 100-basis-point increase in interest rates.

(b) Without working through calculations, indicate whether the duration of the two bonds would be higher or lower if the yield to maturity is 10% rather than 8%.

3. Consider the following portfolio:

Bond	Market Value	Duration (years)
W	$13 million	2
X	$27 million	7
Y	$60 million	8
Z	$40 million	14

(a) What is the portfolio's duration? Interpret this number, i.e., what does this number mean?

(b) What is the contribution to portfolio duration for each bond?