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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.
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.
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.
How is a money market savings account different than a regular savings account Can I make more money in it?
A simple savings account generally pays the owner a set amount of stated interest on his or her deposits based upon an particular annual rate. Money market savings accounts typically require higher balances and limit monthly transactions, but generally do pay a higher interest rate. Both kinds of accounts are guaranteed in the United States by the FDIC and NCUA.
What is face value in Stock Exchange?
Amount stated on the face of the instrument without regard to market value.
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.
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
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.
What is the difference between effective interest method and constant yield method?
An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: Consider a stated annual rate of 10%. Compounded yearly, this rate will turn $1000 into $1100. However, if compounding occurs monthly, $1000 would grow to $1104.70 by the end of the year, rendering an effective annual interest rate of 10.47%. Basically the effective annual rate is the annual rate of interest that accounts for the effect of compounding.
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.
Which voltage is greater in thyristor whether forward break over or reverse breakdown voltage?
It is stated that one of the voltage is greater in thyristor whether it be forward breakover or reverse breakdown voltage. It is also stated that the greater of the 2 voltages in thyristor is the forward breakover voltage.
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.
