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Is the price at which bonds sell determined by the interaction of stated rates of interest and market rates of interest?
Yes, the price at which bonds sell are determined by the interaction of stated rates of interest and market rates of interest.
What happens when issuing bonds payable when the market interest rate is less than the stated interest rate?
premium
What occurs when a bonds stated interest rate is less than the market interest rate?
Since the current market interest rate is higher, it is more attractive to a new investor then the bond with a lower interest rate. Thus, the price of the lower interest rate bond has to decline to be competitive with new bonds in the market.
How would you define the market rate for a bond?
The actual interest rate, however, determined at auction, is referred to as the market rate. The market rate may equal the stated rate, or it may be higher or lower.
When a bonds stated interest rate is less than the market interest rate is the rate at a discount or premium?
When the coupon rate (the contractual periodical "interest" payments) are lower than the yield (the market required return) the bond will be in discount. This discount makes up for the low value of the coupons.
Is the price at which bonds sell determined by the interaction of stated rates of interest and market rates of interest?
Yes, the price at which bonds sell are determined by the interaction of stated rates of interest and market rates of interest.
What happens when issuing bonds payable when the market interest rate is less than the stated interest rate?
premium
What occurs when a bond's stated interest rate is less than the market interest rate?
Since the current market interest rate is higher, it is more attractive to a new investor then the bond with a lower interest rate. Thus, the price of the lower interest rate bond has to decline to be competitive with new bonds in the market.
What occurs when a bonds stated interest rate is less than the market interest rate?
Since the current market interest rate is higher, it is more attractive to a new investor then the bond with a lower interest rate. Thus, the price of the lower interest rate bond has to decline to be competitive with new bonds in the market.
What occurs when a bond's stated interest rate is greater than the market interest rate?
The bond's price will be in premium, meaning exceed 100
How would you define the market rate for a bond?
The actual interest rate, however, determined at auction, is referred to as the market rate. The market rate may equal the stated rate, or it may be higher or lower.
When a bonds stated interest rate is less than the market interest rate is it at a discount or premium?
When a bond's stated interest rate is less than the market interest rate, it is sold at a discount. This is because investors are less willing to pay the full face value for a bond that offers lower returns compared to prevailing rates. As a result, the bond's price falls below its par value to make it more attractive to potential buyers.
When a bonds stated interest rate is less than the market interest rate is the rate at a discount or premium?
When the coupon rate (the contractual periodical "interest" payments) are lower than the yield (the market required return) the bond will be in discount. This discount makes up for the low value of the coupons.
Can interest be added to late rent if not stated in lease?
No interest should only be charged if you are in a mortgage.
A borrower is often confrented with a stated interest rate and an effective interest rate What is the difference and which one should a financial manager recognize as the true cost of borrowing?
A stated interest rate is the rate that is available when you are applying. An effective interest rate is the rate that has been applied to the loan. The true cost of borrowing is the effective interest rate.
Why do rates go up on an ARM interest only mortgage?
Every ARM loan is tied to an index and that has a rate that can increase or decrease. Your loan also has a margin which stays constant. The average margin in 2.25%. Read your Note it will tell you when the first adjustment will be and this will cause your interest rate to increase or decrease. Your payment will adjust, but according to the Note it will still be Interest Only for the period stated on the note. You will see a big increase when the Interest Only period is over and your payment becomes, Principal and Interest.
Who determines the rate of interest paid on a bond?
Bonds have a predetermined rate of interest called the stated or contract rate, which is established by the board of directors.
