Asked by
Alexis Ramos
on Oct 28, 2024
Verified
Which of the following is always equal to the face rate of interest?
A) effective rate
B) yield rate
C) market rate
D) nominal rate
Nominal Rate
The stated interest rate of a financial instrument, not accounting for inflation or compounding effects.
Effective Rate
The actual interest rate on a loan or investment, taking into account the effects of compounding and other factors.
Face Rate
The interest rate stated on the face of a bond or a loan document, which determines the interest payments that the issuer will make.
- Discern among the market rate, contract rate, and other rates pertinent to transactions involving bonds.
Verified Answer
EP
Learning Objectives
- Discern among the market rate, contract rate, and other rates pertinent to transactions involving bonds.