What is the difference between the contractual interest rate and the market interest rate?
answer
The contractual interest rate is used to determine the actual amount of cash interest the issuer pays and the investor receives, whereas the market interest rate is the general rate investors demand for loaning funds.
question
When will the carrying value of bonds equal the market price?
answer
On the date of issuance
question
The carrying value of bonds is another term for
answer
Book value
question
When a bond is issued for more than its face value, the market rate of interest is ________ the interest rate stated on the bond.
answer
Less than
question
By computing the present value of the principal paid at maturity and all interest payments to be made over the term of the bond, you can obtain the ________ of bonds.
answer
Market price
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