The interest rate specified in the bond indenture is called the

A) discount rate
B) contract rate
C) market rate
D) effective rate

Question

The interest rate specified in the bond indenture is called theA)  discount rateB)  contract rateC)  market rateD)  effective rate

Chinish Kalra · Accepted Answer

Final Answer : B, Explanation :  The interest rate specified in the bond indenture is called the contract rate, as it is the rate that is agreed upon in the contract between the issuer and the bondholders. The other options are not applicable in this context. The discount rate is used to determine the present value of future cash flows, the market rate is the current rate of interest in the market, and the effective rate is the actual rate that is earned or paid on a financial instrument.

The interest rate specified in the bond indenture is called the

A) discount rate
B) contract rate
C) market rate
D) effective rate

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