4. 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 an 11% annual coupon Bond L matures in 10 years, while Bond S matures in 1 year. 1. What will the value of the Bond be if the going interest rate is 6%, 8%, and 1297 Assume that only one more interest payment is to be made on Bonds at its maturity and that 10 more payments are to be made on Bond L. Round your answers to the nearest cent. 6 0% 12% Bond L 5 Donds $ b. Why does the longer term bond's prior vary more than the price of the shorter term bond when interest rates change? 1. Long-term bonds have lower interest rate risk than do short-term bonds II. Long-term bonds have lower reinvestment rate risk than do short-term bonds III. The change in price due to a change in the required rate of return increases as a bond's maturity decreases IV. Long-term bonds have greater interest rate risk than do short-term bonds V. The change in price due to a change in the required rate of return decreases as a bond's mature increases