Consider three 20 year bonds, all with a face value of $1000: a) Bond #1 has a coupon rate of 9% and sells for $1100. b) Bond #2 has a coupon rate of…

Consider three 20 year bonds, all with a face value of $1000:

a) Bond #1 has a coupon rate of 9% and sells for $1100.

b) Bond #2 has a coupon rate of 8% and sells for $1100.

c) Bond #3 has a coupon rate of 9% and sells for $1050.

Which bond has the highest yield to maturity? Defend your answer. (2 points)