A previously issued A2, 15-year industrial bond provides a return one-half highe

Question

A previously issued A2, 15-year industrial bond provides a return one-half higher than the prime interest rate of 13 percent. Previously issued A2 public utility bonds provide a yield of one-fourth 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.)
  

b. Compute the total value of the 86 bonds. (Do not round intermediate calculations and round your answer to 2 decimal places.)
  

Explanation / Answer

Interest Rate on Previously Issued :-

Particulars Rate A2 15 year industrial Bonds (13% + (13%/2)) 19.5% Additional return on A2 15 year public utility bond (1/4) 0.25% Additional Return on Newly Issues (3/4) 0.75% Anticipated Return on newly issued A2 Public Utility Bonds 20.5%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.