Compute the difference between the price of these two bonds

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Reference no: EM132033762

You are trying to price two bonds that have the same maturity and par value but different coupon rates and different required rates of return.

Both bonds mature in 3 years and have par values of $1000. One bond has a coupon rate of 7% and a required rate of return of 7%. The other bond has a coupon rate of 5% and a required rate of return of 5%.

What is the absolute value of the difference between the price of these two bonds?

You should set your calculator for at least four decimal places of accuracy.

Reference no: EM132033762

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