Problem 7.05 (Bond Valuation) Question 6 of 12 Check My Work (2 remaining) eBook Problem Walk-Through 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 17 years, while Bond S matures in 1 year, What will the value of the Bond L be if the going interest rate is 7%, 8%, and 1197 Assume that only one more interest payment is to be made on Bond Sat its maturity and that 17 more payments are to be made on Bond L Round your answers to the nearest cent. 11% 7% 8% Bond L $ $ Bonds $ $ b. Why does the longer-term bond's price vary more than the price of the shorter-term bond when Interest rates change? 1. Long-term bonds have lower reinvestment rate risk than do short-term bonds. II. The change in price due to a change in the required rate of return increases as a bond's maturity decreases. III. Long-term bonds have greater interest rate risk than do short-term bonds IV. The change in price due to a change in the required rate of retum decreases as a bond's maturity increases V. Long term bonds have lower interest rate risk than do short-term bonds. -Select- Check My Work (a remaining) Olen Ney