eBook An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 9% annual coupon. Bond L matures in 13 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 13 more payments are to be made on Bond L.

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 10%? Round your answer to the nearest cent. $

What will the value of the Bond S be if the going interest rate is 10%? Round your answer to the nearest cent. $

What will the value of the Bond L be if the going interest rate is 11%? Round your answer to the nearest cent. $

What will the value of the Bond S be if the going interest rate is 11%? Round your answer to the nearest cent. $

Why does the longer-term bonds 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.

2.Long-term bonds have lower interest rate risk than do short-term bonds.

3.Long-term bonds have lower reinvestment rate risk than do short-term bonds.

4.The change in price due to a change in the required rate of return increases as a bond's maturity decreases.

5.Long-term bonds have greater interest rate risk than do short-term bonds.