You are trying to price two bonds that have the same maturity and par value but...

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Finance

You are trying to price two bonds that have the same maturityand par value but different coupon rates and different requiredrates of return. Both bonds mature in 3 years and have par valuesof $1000. One bond has a coupon rate of 7% and a required rate ofreturn of 7%. The other bond has a coupon rate of 5% and a requiredrate of return of 5%. What is the absolute value of the differencebetween the price of these two bonds?
$

You should set your calculator for at least four decimal places ofaccuracy.
Place your answer in dollars and cents.

Do not include a dollar sign or comma in your answer.

Answer & Explanation Solved by verified expert

4.1 Ratings (496 Votes)

The price of bonds can be calculated with the use of PV Present Value functionformula of EXCELFinancial Calculator The functionformula for PV is PVRateNperPMTFV See Answer

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You are trying to price two bonds that have the same maturityand par value but different coupon rates and different requiredrates of return. Both bonds mature in 3 years and have par valuesof $1000. One bond has a coupon rate of 7% and a required rate ofreturn of 7%. The other bond has a coupon rate of 5% and a requiredrate of return of 5%. What is the absolute value of the differencebetween the price of these two bonds?$You should set your calculator for at least four decimal places ofaccuracy.Place your answer in dollars and cents.Do not include a dollar sign or comma in your answer.