An investor has two bonds in his portfolio that have a face value of $$1,000$ and pay a $10\%$ annual coupon. Bond $L$ matures in $12$ years, while Bond $S$ matures in $1$ year.

Assume that only one more interest payment is to be made on Bond $S$ at its maturity and that $12$ 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 $4\%?$ Round your answer to the nearest cent. $

What will the value of the Bond $S$ 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 $9\%?$ Round your answer to the nearest cent. $

What will the value of the Bond $S$ be if the going interest rate is $9\%?$ Round your answer to the nearest cent. $

What will the value of the Bond $L$ be if the going interest rate is $14\%?$ Round your answer to the nearest cent. $

What will the value of the Bond $S$ be if the going interest rate is $14\%?$ 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?

I. 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.

III. 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.