The interest rate that determines the amount of interest expense each interest date is referred to as the:

Question

Quizplus · Accepted Answer

The effective rate takes into account any compounding of interest and is the rate that determines the actual amount of interest expense or income each interest period. The stated rate, expense rate, and cash rate may be different or the same as the effective rate depending on the terms of the loan or investment.

The Interest Rate That Determines the Amount of Interest Expense