Attempts Keep the Highest /3.5 3. Problem 7.05 (Bond Valuation) cBook 1 Problem Walk-Through An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 8% annual coupon, Bond L matures in 18 years, while Bonds matures in 1 year 2. What will the value of the Hond L be if the going interest rate is 5%, 6%, and 9%? Assume that only one more interest payment is to be made on Bonds at its maturity and that 18 more payments are to be made on Bond L. Round your answers to the nearest cent. 5% 9% Bond L 6% $ $ $ 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 interest rate risk than do short-term bonds 11. Long-term bonds have lower reinvestment rate risk than do short-term bonds. III. The change in price dun 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 maturity increases. Sect