You have three debt instruments: a simple loan for $1 million that requires a repayment of $1,009,000 in 1 year, a one -year discount bond with a face value $1000 that sells today for $990, and a one year 10%- coupon-rate bond with a face value $1000 that sells today for $990. Which one of these instruments has the highest yield to maturity? Show all your work.

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Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.