The rate quoted in the bond contract used to calculate the cash payments for interest is called the:

A) Face rate.

B) Yield rate.

C) Market rate.

D) Stated rate.

Answer: D

Which of the following is true for bonds issued at a discount?

A) The stated interest rate is greater than the market interest rate.

B) The market interest rate is greater than the stated interest rate.

C) The stated interest rate and the market interest rate are equal.

D) The stated interest rate and the market interest rate are unrelated.

Answer: B

The true interest rate used by investors to value a bond is called the:

A) Face interest rate.

B) Cash payment rate.

C) Market interest rate.

D) Stated interest rate.

Answer: C