Question: A previously issued A2, 15-year industrial bond provides a return 25% higher than the prime interest rate of 9 percent. Previously issued A2 public utility

A previously issued A2, 15-year industrial bond provides a return 25% higher than the prime interest rate of 9 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.)

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