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In this study, the authors introduce adaptive modulation and coding in a two-way amplify-and-forward (AF) relay network to improve the system performance. They consider a cooperative system where two user nodes exchange information with the assistance of multiple two-way AF relays. In the proposed scheme, the user nodes adaptively choose the appropriate modulation and coding scheme to ensure that the frame error rate (FER) satisfies the system requirement; all relays are utilised to forward the received signals to the user terminals. Furthermore, they provide a better approximation of the cumulative distribution function of the destination signal-to-noise ratio; and thus, derive more accurate expressions including average spectral efficiency and average FER in closed-form, over Rayleigh fading channels. The theoretical analysis is verified by numerical results.