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1 One bond has a coupon rate of 8%, another a coupon rate of 12%. Both bonds pay interest annually, have 10-year maturities, and sell
1 One bond has a coupon rate of 8%, another a coupon rate of 12%. Both bonds pay interest annually, have 10-year maturities, and sell at a yield to maturity of 10%. 10 points eBook Print References a. If their yields to maturity next year are still 10%, what is the rate of return on each bond? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place. Rate of return Bond 1 % Bond 2 % b. Does the higher-coupon bond give a higher rate of return over this period? Does the higher-coupon bond give a higher rate of return over this period?
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