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The interest payment is called the "coupon" and it is usually a fixed amount per year, which is set when the bond is issued. But when you buy a bond on the market for a price that is different from the original face value, the effective interest rate is called the "yield". The reasons why the yield might be different from the coupon rate are described in the related link called Bond yields and coupon.
What else can I help you with?
The rate of interest that is actually incurred on a bond payable is called?
Effective rate.
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.
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
What is Contractual interest rate on a bond?
The contractual interest rate is the rate at which the borrower pays and the investor receives are determined.
How does subordination affect the interest rate on a bond?
Subordination affects the interest rate on a bond because it is unsecured and has lesser priority than that of an additional debt claim on the same asset. It has higher interest rate required to compensate for the higher risk. If interest rate has been increased the price of the bond will fall. If the price of the bond falls, the yield that can be earned will increase.
What is the interest rate the bond issuer pays to the bondholder called?
The interest rate paid on a bond is known as the coupon rate. A $1,000 fixed rate bond with a 5% coupon rate purchased at par would yield $50 annually in interest payments.
The rate of interest that is actually incurred on a bond payable is called?
Effective rate.
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.
When market interest rates exceed a bond's coupon rate the bond will?
When market interest rates exceed a bond's coupon rate, the bond will:
How are interest on a bond calculated?
Know the bond's face value, then, find the bond's coupon interest rate at the time the bond was issued or bought, then, multiply the bond's face value by the coupon interest rate it had when issued, then, know when your bond's interest payments are made, finally, multiply the product of the bond's face value and interest rate by the number of months in between payments.
What is floating interest?
It is also called variable rate or adjustable rate. It does not have a fixed interest rate over the life of any of these debt instrument: loan, bond, mortgage, or credit.
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.
The market interest rate related to a bond is also called the?
"Yield" or "YTM" ("Yield to Maturity")
Do you want a high or low interest rate in a savings bond?
If you are investing in a savings bond, you wish for it to have a high rate of interest. If you are selling savings bonds, you wish it to be at a low rate of interest.
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
What is Contractual interest rate on a bond?
The contractual interest rate is the rate at which the borrower pays and the investor receives are determined.
How does subordination affect the interest rate on a bond?
Subordination affects the interest rate on a bond because it is unsecured and has lesser priority than that of an additional debt claim on the same asset. It has higher interest rate required to compensate for the higher risk. If interest rate has been increased the price of the bond will fall. If the price of the bond falls, the yield that can be earned will increase.
