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One bond has a coupon rate of 8%, another coupon rate of 12%. Both bonds have 10-year maturities and sell at a yield to maturity
One bond has a coupon rate of 8%, another coupon rate of 12%. Both bonds have 10-year maturities and sell at a yield to maturity of 10%. If their yields to maturity next year are still 10%, what is the rate of return on each bond? Does the higher coupon bond give a higher rate of return?
(Assume bond's face value is $1,000) - calculate using formulas/equations and then with a financial calculator.
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