What is the effective interest rate?
A)Yield on the issue date.
B)Amount to be repaid at maturity.
C)Price of bond on issue date.
D)Interest rate specified in the bond indenture.

Question

Quizplus · Accepted Answer

The effective interest rate, also known as the yield, is the return on investment for a bond based on the price paid for the bond and the interest payments received, which is most accurately described as the yield on the issue date.

What Is the Effective Interest Rate