Stated Rate vs. Effective Rate

  • Creator
    Topic
  • November 10, 2010 at 1:08 am #159022
    thorsbew
    Participant

    Hello all,

    FAR is my last exam and I’m having trouble with the stated rate of interest and effective rate of interest when trying to determine how much interest expense/receivable should be determined on a simple bond.

    Looking at two different problems in the Wiley book, one says to use the stated rate, one says to use the effective rate! It’s driving me crazy! Any advice?

    Aud - 65 + 79, BEC - 82, REG - 89, FAR - 86

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