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3. You are evaluating the following bond investments. Both bonds pay $1,000 at maturity. Bond 1 has a three-year maturity, pays a 5% annual coupon,

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3. You are evaluating the following bond investments. Both bonds pay $1,000 at maturity. Bond 1 has a three-year maturity, pays a 5% annual coupon, and is A-rated. Bond 1's yield to maturity is 6%, the 90-day Treasury bill rate is 0.5%, and the 10-year Treasury bond rate is 2.2%. Bond 2 has a five-year maturity, pays an 8% annual coupon, is BB-rated, and the price is reported in today's Wall Street Journal at 102. a. What is the yield to maturity of Bond 2

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