The contract rate for a bond is:

A) the annual interest rate based on selling price.
B) the annual interest rate based on market value.
C) the annual interest rate based on face value.
D) None of these answers is correct.

Contract Rate

The agreed-upon interest rate specified in a contractual agreement, such as a loan or bond.

Bond

An interest-bearing note payable usually in $1,000 denominations issued by a corporation to a large group of lenders.

Annual Interest Rate

The percentage of interest that will be charged or earned on a principal amount over the course of a year.