Assume the McDonald’s and Burger King have similar $1,000 par value bond issues outstanding. The Burger King bond pays an 8 percent semiannual coupon and matures 15 years from today. The McDonald’s bond has a coupon rate of 10 percent, with interest paid annually, and it also matures in 15 years. If the yield to maturity is 9 percent for both bonds, what is the difference in the current market prices of the two bonds?
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