Asked by
AHMAD BHATTI
on Oct 28, 2024
Verified
Which of the following may not be equal to the contract rate of interest?
A) stated rate
B) nominal rate
C) face rate
D) effective rate
Contract Rate
This refers to the interest rate stated in a contract that determines the amount of interest owed on a loan or financial agreement.
Stated Rate
The interest rate expressed in the terms of a loan or investment agreement, not necessarily reflecting the actual yield.
Effective Rate
The effective rate is the actual interest rate on a loan or financial product, taking into account the compounding of interest, as opposed to the nominal rate.
- Differentiate between the rates of the market, the rates stipulated in contracts, and other pertinent rates found in bond dealings.
Verified Answer
DJ
Learning Objectives
- Differentiate between the rates of the market, the rates stipulated in contracts, and other pertinent rates found in bond dealings.