07 End-of-Chapter Problems bus di meil Valuation ck to Assignment Attempts Keep the Highest/2 7. Problem 7.05 (Bond Valuation) eBook Problem Walk-Through An Investor has two bonds in his portfolio that have a face value of $1,000 and pay a 10% annual coupon. Bond L matures in 15 years, while Bond S matures in 1 year a. What will the value of the Bond L be if the going interest rate is 7%, 8%, and 1167 Assume that only one more interest payment is to be made on Bonds at its maturity and that 15 more payments are to be made on Bond L Round your answers to the nearest cent. 8% 11% Bond $ Bonds $ b. Why does the longer-term bond's price vary more than the price of the shorter-term bond when interest rates change? 1. Long-term bonds have lower reinvestment rate risk than do short-term bonds. II. The change in price due to a change in the required rate of return increases as a bond's maturity decreases III. Long-term bonds have greater interest rate risk than do short-term bonds IV. The change in price due to a change in the required rate of return decreases as a bond's maturity increases. V. Long-term bonds have lower interest rate risk than do short-term bonds N A. Grade it Now Save & Continue Continue without saving