The interest rate that determines the amount of cash interest the borrower pays and the investor receives each year is called the ________.
A) amortization rate
B) market interest rate
C) stated interest rate
D) discounting rate

Question

Quizplus · Accepted Answer

The stated interest rate, also known as the nominal or coupon rate, is the rate that determines the amount of cash interest the borrower pays annually to the lender or investor. It is explicitly stated in the bond contract or loan agreement.

The Interest Rate That Determines the Amount of Cash Interest