The interest rate that determines the amount of cash paid for interest to the bondholder is referred to as the
A)effective rate.
B)market rate.
C)coupon rate.
D)daily rate.
E)imputed rate.

Question

Quizplus · Accepted Answer

The coupon rate is the interest rate that is specified on the bond at the time of issuance and is used to determine the periodic interest payments made to the bondholder. It is also known as the nominal rate. The effective rate is the actual rate of return earned by the bondholder and takes into account the market price of the bond. The market rate is the prevailing interest rate in the market for similar securities. The daily rate and imputed rate are not commonly used terms in the context of bond interest rates.

The Interest Rate That Determines the Amount of Cash Paid