What is imputed interest?

Question

Quizplus · Accepted Answer

Imputed interest refers to the implicit interest rate, also known as the effective interest rate. This is the rate that reflects the true cost of borrowing or the true yield of an investment. It takes into account factors such as compounding, frequency of payments and any discounts or premiums on the price of the investment. Option A refers to the stated interest rate, which is the rate that the lender or issuer of the investment advertises. Option C refers to the average interest rate, which may or may not be relevant in a given context. Option D refers specifically to the interest rate on a bond or other fixed-income security.

What Is Imputed Interest