4. Problem 7.05 (Bona varauun) 2 ellook Problem Walk Through An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual coupon. Bond L matures in 11 years, while Bond 5 matures in 11 year. a. What will the value of the Bond L be if the going interest rate is 6%, 7%, and 12% 7 Assume that only one more interest payment is to be made on Bond S at its maturity and that 11 more payments are to be made on Bond L. Round your answers to the nearest cent. 12% $ Bond L $ $ $ Bond S $ 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 greater interest rate risk than do short-term bonds. II. The change in price due to a change in the required rate of return decreases as a bond's maturity increases. 111. Long-term bonds have lower interest rate risk than do short-term bonds. IV. Long-term bonds have lower reinvestment rate risk than do short-term bonds. V. The change in price due to a change in the required rate of return increases as a bond's maturity decreases. -Select