Attempts: Keep the Highesti / 10. 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 annual coupon Bond L matures in 14 years, while Bond 5 matures in 1 year a. What will the value of the Bond L be if the going interest rate 546,6% and 957 Assume that only one more interest payment is to be made on Bond 5 at its maturity and that 14 more payments are to be made on Bond L Round your answers to the nearest cent. Bond L Bond S 5 $ 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 revestment 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