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An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 6% annual coupon. Bond L matures in
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 6% annual coupon. Bond L 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 Bond L be if the going interest rate is 4%7 Round your answer to the nearest cent. $ What will the value of the Bond be if the going interest rate is 4%? Round your answer to the nearest cent. $ What will the value of the Bond L be if the going interest rate is 8%? Round your answer to the nearest cent. $ What will the value of the Bond 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 12%? 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 cent, $ 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 increases as a bond's maturity decreases. II. Long-term bonds have greater interest rate risk than do short-term bonds. III. The change in price due to a change in the required rate of return decreases as a bond's maturity increases. IV. Long-term bonds have lower interest rate risk than do short-term bonds. V. Long-term bonds have lower reinvestment rate risk than do short-term bonds. -Select
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