Asked by Shavon Revell on May 07, 2024
Verified
The interest rate specified in the bond indenture is called the:
A) market rate.
B) discount rate.
C) contract rate.
D) effective rate.
Bond Indenture
A contract that spells out the provisions of the contract between the corporation and bondholder.
Interest Rate
The percentage at which interest is paid by a borrower for the use of money, or the amount a lender charges for the borrowing of money.
Contract Rate
The agreed-upon interest rate specified in a loan or bond agreement.
- Grasp the outcomes of bond terms on financial planning within companies.
Verified Answer
JC
Jacob CutterMay 11, 2024
Final Answer :
C
Explanation :
The interest rate specified in the bond indenture is called the contract rate. It is also known as the coupon rate, and it determines the amount of interest the bond issuer will pay to the bondholders.
Learning Objectives
- Grasp the outcomes of bond terms on financial planning within companies.