What is the difference between the stated interest rate and the market interest rate?

What is the difference between the stated interest rate and the market interest rate?

Expert Solution

Step 1: Definition of interest rate

The interest rate is the rate this is provided on the invested amount.

Step 2: Difference between market interest rate and stated interest rate

Stated Interest Rate	Market interset Rate
The stated interest rate remains fixed during the whole life	The market interest rate kept changing during the life of the bond.

Stated interest is the interest that the issuer provides.	Market interest rate is the interest that investor demands,

The stated and market interest rates are different in many ways. Both play a vital role in the bond market.

Sahil Dangi answered 2 years ago

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