When determining the amount of interest to be paid on a bond, which of the following information is necessary?
A) The market value of the bonds after one year.
B) The selling price of the bonds.
C) The stated rate of interest on the bonds.
D) The effective rate of interest on the bonds.

Question

Quizplus · Accepted Answer

The stated rate of interest on the bonds is necessary to determine the amount of interest to be paid on the bond. The market value of the bonds and the selling price of the bonds may affect the yield or return on the bond, but they do not directly impact the amount of interest to be paid. The effective rate of interest may be useful in calculating the yield or return on the bond, but it is not necessary to determine the amount of interest to be paid.

When Determining the Amount of Interest to Be Paid on a Bond