Public utility issues have a greater yield than other corporate issues, primarily because:
A)nuclear utility issues carry an extremely high risk premium.
B)public utility issues generally have a longer maturity.
C)investor demand for utility issues is greater than for other issues.
D)utilities' demands for funds is greater than that of other segments.

Question

Quizplus · Accepted Answer

The higher yields on public utility issues represent a supply-demand phenomenon more than anything else. A constant stream of new issues to the market can only be absorbed by a higher yield pattern. In other cases, the higher required return may also be associated with quality deterioration as measured by profitability and interest coverage.

Public Utility Issues Have a Greater Yield Than Other Corporate