Interest rate on a newly issued public utility bond

Reference no: EM131788333

Question: A previously issued A2, 15-year industrial bond provides a return one-fourth higher than the prime interest rate of 8 percent. Previously issued A2 public utility bonds provide a yield of three-eighths of a percentage point higher than previously issued A2 industrial bonds of equal quality. Finally, new issues of A2 public utility bonds pay one-fourth of a percentage point more than previously issued A2 public utility bonds. What should be the interest rate on a newly issued A2 public utility bond?

Reference no: EM131788333

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