One bond has a coupon rate of 7.2%, another a coupon rate of 8.6%. Both bonds pay interest annually, have 14-year maturities, and sell at a yield to maturity of 8.0%.

a.If their yields to maturity next year are still 8.0%, what is the rate of return on each bond?(Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place.)

b.Does the higher-coupon bond give a higher rate of return over this period?

• Yes
• No