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One bond has a coupon rate of 7%, another a coupon rate of 8.5%. Both bonds have 11-year maturities and sell at a yield to maturity of 8%. a. If their yields to maturity next year are still 8%, what is the rate of return on each bond? Rate of Return Bond 1 % Bond 2 % -- b. Does the higher coupon bond give a higher rate of return?

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