A $1000 face value bond with 8 years to maturity pays a semi-annual coupon of 10% and the market required yield to maturity is also 10%.

The price of this bond is $___________ , and if interest rates increase by 50 basis points to 10.5%, the price of this bond will fall by _________%.

Compare to: A $1000 face value bond with 4 years to maturity pays a semi-annual coupon of 10% and the market required yield to maturity is also 10%.

The price of this bond is $__________ , and if interest rates increase by 50 basis points to 10.5%, the price of this bond will fall by _______%.

Therefore: interest rate risk ____________ as the time to maturity of a bond decreases.

(Round bond values to the nearest $. Round % answers to nearest basis point. In last blank, enter either 'increase' or 'decrease').