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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 17 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 17 more payments are to be made on Bond L a. What will the value of the Bond I be if the going interest rate is 5%? Round your answer to the nearest cent. What will the value of the Bond S be if the going interest rate is 5%? 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 S be if the going interest rate is 847 Round your answer to the nearest cent. $ What will the value of the Band Lothe going interest rate is 12% Round your answer to the nearest cont. 5 What will the value of the one if the going interest rate is 12967 Round your answer to the nearest ont B 31 PM 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. 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. -Select
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