The interest rate used to calculate the cash interest payments by the issuer of bonds is
A) The market rate of interest
B) The effective interest rate
C) The stated interest rate
D) Equal to the actual interest expense rate

Question

Quizplus · Accepted Answer

The stated interest rate, also known as the coupon rate, is the rate used to calculate the cash interest payments by the issuer of bonds. This rate is fixed at the issuance of the bond and does not change over the life of the bond.

The Interest Rate Used to Calculate the Cash Interest Payments