What is the term for the interest rate stated in the bond contract?

The interest rate stated in the bond contract is known as the stated interest rate. This is the rate that is explicitly listed on the bond agreement and is the rate used to calculate the interest payments that the bond issuer will pay to bondholders. It represents the nominal interest rate that lenders can expect to receive, and it is expressed as a percentage of the bond's face value.

The stated interest rate is crucial for both investors and issuers because it determines the cash flows associated with the bond, specifically the periodic interest payments. For an investor, understanding this rate helps them assess the bond's yield and compare it against other investment opportunities. For the issuer, it reflects the cost of borrowing.

In contrast, the market rate refers to the interest rate prevailing in the market at the time the bond is issued or traded, and it can differ from the stated rate. The effective interest rate, meanwhile, is calculated based on the bond's actual return, taking into account the price paid for the bond and any premiums or discounts. Amortization rate typically refers to the process of paying off debt through regular payments and is not directly related to the interest rate in the bond contract. Thus, the stated interest rate is the correct answer as it directly pertains to the bond