The difference between the prices of these two bonds

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Reference no: EM132033481

You are trying to price two bonds that have the same maturity and par value but different coupon rates. Both bonds mature in 8 years and at maturity both bonds return the par value of $1,000. One bond has a coupon rate of 3% and a yield to maturity of 3%.

The other bond has a coupon rate of 5% and a yield to maturity of 5%. What is the absolute value of the difference between the prices of these two bonds?

Reference no: EM132033481

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