Answer
a) Yield rate: interest rate actually earned by bondholders
b) Nominal rate: interest rate that bond issuers promise to pay bondholders
c) Stated rate: same as b)
d) Market rate: same as a) and e)
e) Effective rate: same as a) and d)
Work Step by Step
The nominal rate is the interest rate before inflation is taken into account. The yield rate has been adjusted for inflation.
