Match each description below to the appropriate term (a-g).

-If the contract rate is less than the effective rate
A)Contract rate
B)Effective rate
C)Bond discount
D)Bond premium
E)Bond
F)Bond indenture
G)Principal

Question

Match each description below to the appropriate term (a-g).
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-If the contract rate is less than the effective rate
A)Contract rate
B)Effective rate
C)Bond discount
D)Bond premium
E)Bond
F)Bond indenture
G)Principal

Quizplus · Accepted Answer

A bond discount occurs when the contract rate (the interest rate stated on the bond) is less than the effective rate (the market interest rate at the time the bond is issued).

Match Each Description Below to the Appropriate Term (A-G)