The stated interest rate on a bond determines the amount of interest the issuer is expected to pay annually or semiannually.

Question

Quizplus · Accepted Answer

This statement is true. The stated interest rate, also known as the coupon rate, is the rate at which the issuer agrees to pay interest to bondholders annually or semiannually. This rate is typically fixed at the time the bond is issued and remains the same for the life of the bond. The amount of interest paid to bondholders is calculated by multiplying the face value of the bond by the coupon rate.

The Stated Interest Rate on a Bond Determines the Amount