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26. Problem 7.05 (Bond Valuation) etlook An investor has two bonds in his portfollo that have a face value of $1,000 and pay a 10% annual coupon, Bond . matures in 10 years, while Bond S matures in 1 year. 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 a. What will the value of the Band L be if the going interest rate is 6% Round your answer to the nearest cont. What will the value of the Bond Sbe if the going interest rate is 6%? Round your answer to the nearest cent. $ $ What will the value of the Bond L be if the poing interest rate is 8%? Round your answer to the nearest cent. 5 What will the value of the Bond S be if the going interest rate is 8%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 1247 Round your answer to the nearest cent. $ What will the value of the Bond S be if the going interest rate is 12%? Round your answer to the nearest cont. $ b. Why does the longer term bond's price vary more than the price of the shorter term bond when Interest rates change? 1. The change in price due to a change in the required rate of return decreases as a bond's maturity increases II. 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, IV. The change in price due to a change in the required rate of return increases as a bond's maturity decreases V. Long-term bonds have greater interest rate risk than do short-term bonds. -Select

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