A previously issued A2, 15 -year industrial bond provides a return25%higher than the prime interest rate of 8 percent. Previously issued A2 public utility bonds provide a yleld of one-half of a percentage point higher than previously issued A2 industrial bonds of equal quality. Finally, new issues of A2 public utility bonds pay one-half 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.)
A previously issued A2, 15 -year industrial bond provides a return25%higher than the prime interest rate of 8 percent. Previously issued A2 public utility bonds provide a yleld of one-half of a percentage point higher than previously issued A2 industrial bonds of equal quality. Finally, new issues of A2 public utility bonds pay one-half 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.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A previously issued A2, 15 -year industrial bond provides a return25%higher than the prime interest rate of 8 percent. Previously issued A2 public utility bonds provide a yleld of one-half of a percentage point higher than previously issued A2 industrial bonds of equal quality. Finally, new issues of A2 public utility bonds pay one-half 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.)
Transcribed Image Text:A previously issued A2, 15-year industrial bond provides a return 25% higher than the prime interest rate of 8 percent. Previously
issued A2 public utility bonds provide a yield of one-half of a percentage point higher than previously issued A2 industrial bonds of
equal quality. Finally, new issues of A2 public utility bonds pay one-half 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
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