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What is the rate of return on each bond

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Reference no: EM133019894

Question - One bond has a coupon rate of 6.2%, another a coupon rate of 8.1%. Both bonds pay interest annually, have 9-year maturities, and sell at a yield to maturity of 7.0%.

a. If their yields to maturity next year are still 7.0%, what is the rate of return on each bond?

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

Reference no: EM133019894

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