Answer: Contingent convertible bonds

**Explanation:** Contingent convertible bonds (CoCos) typically have the highest yield to maturity among these options because: 1. **Risk Profile**: CoCos are hybrid securities that automatically convert to equity when the issuer's capital ratio falls below a certain threshold. This creates significant risk for bondholders, as they can lose their bond position and become equity holders during times of financial stress. 2. **Comparison with other bonds**: - **Putable bonds**: These give bondholders the right to sell the bond back to the issuer at a predetermined price. This option feature benefits the bondholder, reducing risk and therefore typically commanding a lower yield. - **Convertible bonds**: These give bondholders the right to convert the bond into a predetermined number of shares. While this conversion feature adds some risk, it's generally less risky than CoCos because conversion is at the bondholder's discretion and typically occurs when the issuer is doing well. - **Contingent convertible bonds**: These automatically convert to equity when specific triggers are met (usually related to the issuer's capital adequacy). This forced conversion during financial distress creates the highest risk for investors. 3. **Risk-Return Relationship**: According to fixed income principles, higher risk must be compensated with higher expected return (yield). Since CoCos carry the highest risk among these three bond types, they should offer the highest yield to maturity. 4. **Market Practice**: In practice, CoCos do trade with higher yields than both putable and convertible bonds due to their unique risk characteristics, particularly the potential for forced conversion during periods of financial weakness. Therefore, contingent convertible bonds most likely have the highest yield to maturity when all else is equal.

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