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You just purchased a $1,000 par value, 5-year bond with a coupon rate of 8.00% (paid annually) that has a yield to maturity of 6.90%.

You just purchased a $1,000 par value, 5-year bond with a coupon rate of 8.00% (paid annually) that has a yield to maturity of 6.90%. If you sell this bond in 2 years for $1,050, what would be your effective annual rate of return, if coupon payments are reinvested at a 2.80% annual interest rate?

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