The modified duration of a bond portfolio is calculated as the weighted average of the modified durations of the individual bonds, using the market values of the bonds as weights.

1. Calculate the modified durations of the individual bonds:

   • Bond 1: Money Duration / Market Price = 730 / 95 ≈ 7.6842
   • Bond 2: Money Duration / Market Price = 515 / 120 ≈ 4.2917

2. Determine the market values of the bonds:

   • Bond 1: €25 million × (95 / 100) = €23,750,000
   • Bond 2: €25 million × (120 / 100) = €30,000,000

3. Calculate the weights of each bond in the portfolio:

   • Weight of Bond 1: €23,750,000 / (€23,750,000 + €30,000,000) ≈ 44.186%
   • Weight of Bond 2: €30,000,000 / (€23,750,000 + €30,000,000) ≈ 55.814%

4. Compute the portfolio's modified duration:

   • (44.186% × 7.6842) + (55.814% × 4.2917) ≈ 3.3953 + 2.3953 ≈ 5.7906, rounded to 5.8.

Option B incorrectly assumes the weighted average of the money durations divided by 100, while Option C incorrectly uses an equal-weighted average of the money durations.