Interest rate on newly issued public utility bond

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Reference no: EM131907458

A previously issued A2, 15-year industrial bond provides a return one-half higher than the prime interest rate of 10 percent. Previously issued A2 public utility bonds provide a yield of five-eighths of a percentage point higher than previously issued A2 industrial bonds of equal quality. Finally, new issues of A2 public utility bonds pay three-fourths 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? (Do not round intermediate calculations. Input your answer as a percent rounded to 3 decimal places.)

Interest rate:

Reference no: EM131907458

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