The market interest rate represents the true interest rate used by investors to value a company's bond issue.

Question

Quizplus · Accepted Answer

The market interest rate is the rate at which investors are willing to lend their funds and is used to determine the fair value of a company's bond issue. This rate reflects the current economic conditions, inflation expectations, supply and demand for credit, and the perceived creditworthiness of the issuer. Thus, it is the true interest rate used by investors to evaluate the attractiveness of a bond investment.

The Market Interest Rate Represents the True Interest Rate Used