Asked by Amirul Hasan on May 21, 2024
Verified
The return required by the market on the day of issuance
A) Contract rate
B) Effective rate
C) Bond discount
D) Bond premium
E) Bond
F) Bond indenture
G) Principal
Effective Rate
Refers to the real rate of interest earned or paid on an investment, loan, or other financial product, adjusted for the effect of compounding over a given period.
Return Required
The minimum expected rate of return on an investment necessary for an investor to consider it worthwhile.
- Learn critical bond definitions including face value, contract rate, effective rate, and bond indenture.
Verified Answer
CH
Corrie Hofford CastleMay 28, 2024
Final Answer :
B
Explanation :
The term that matches this description is the Effective rate, which is the actual return that investors will receive on a bond, taking into account any premiums or discounts.
Learning Objectives
- Learn critical bond definitions including face value, contract rate, effective rate, and bond indenture.