5RQ

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

Verified

Answer

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

1Step 1: Definition of interest rate

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

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

Stated Interest Rate	Market interest 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 user provides.	Market interest rate is the interest that investor demands,