Asked by Anastasiia Semenenko on Jun 30, 2024
Verified
The interest rate investors demand for loaning funds is the
A) market interest rate.
B) stated rate.
C) contractual interest rate.
D) bond interest rate.
Market Interest Rate
The rate of interest prevailing in the market for securities, affecting the cost of borrowing or the return on investments.
Stated Rate
The interest rate expressed in the terms of a loan or investment agreement, not including the effects of compounding.
- Comprehend the fundamental principles of bond amortization and distinguish between the effective-interest method and the straight-line approach.
Verified Answer
SS
Starla SmithJul 06, 2024
Final Answer :
A
Explanation :
The interest rate investors demand for loaning funds is determined by the market, based on supply and demand for credit. This is referred to as the market interest rate. The stated rate is the rate specified in the loan agreement, while the contractual interest rate is the rate agreed upon in a contract for a financial instrument such as a bond. However, the bond interest rate also refers to the market interest rate for a bond. Thus, the best choice is A.
Learning Objectives
- Comprehend the fundamental principles of bond amortization and distinguish between the effective-interest method and the straight-line approach.
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