o Assignment empts Keep the Highest/7 Problem 7.05 (Bond Valuation) eBook Problem Walk-Through Investor has two bonds in his portfolio that have a face value of $1,000 and pay a 12% annual coupon. Bond L matures in 19 years, while Bond S matures in 1 year. a. What will the value of the Bond L be if the going interest rate is 7%, 8%, and 13 % ? Assume that only one more interest payment is to be made on Bond S at its maturity and that 19 more payments are to be made on Bond L. Round your answers to the nearest cent. 7% 8% 13% 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. III. 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. Selectv eBook Problem Walk-Through Nesmith Corporation's outstanding bonds have a $1,000 par value, a 10% semiannual coupon, 12 years to maturity, and a 14% YTM. What is the bond's price? Round your answer to the nearest cent