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    Interest rate on a newly issue AAl public utility bond

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    A previously issued Aal, 20-year industrial bond provides a return on-fourth higher than the prime interest rate assumed to be at 8%. Previously issued public utility bonds provide a yield of three-fourths of a percentage point higher than previously issued industrial bonds of equal quality. Finally, new issues of AAl public utility bonds pay one-fourth of a percentage point more than previously issued public utility bonds.

    What should the interest rate be on a newly issue AAL public utility bond?

    Hint: Aal 20yr. industrial bonds = 8% * 1.25 = X% additional return on Aal public utility bond (given)

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    https://brainmass.com/business/bond-valuation/interest-rate-aal-public-utility-bond-48464

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    What should the interest rate be on a newly issue AAl public utility bond?
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    This explains the computation of interest rate be on a newly issue AAl public utility bond.

    $2.19

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