The rate of interest actually earned by bondholders is called the
A) stated rate.
B) coupon rate.
C) nominal rate.
D) effective rate.

Question

Quizplus · Accepted Answer

The effective rate takes into account any interest compounding or other factors that affect the actual return on the investment, making it the most accurate measure of the rate of interest earned by bondholders. The stated, coupon, and nominal rates only represent the fixed rate of interest promised by the bond issuer.

The Rate of Interest Actually Earned by Bondholders Is Called