Final answer:
The effective interest rate can be calculated using the yield on the bond, which is the total return including interest payments and capital gains.
Step-by-step explanation:
When a bond issue sells for more than its face amount, the effective interest rate can be calculated using the yield on the bond. The yield is the total return on the bond, which includes interest payments and capital gains. To calculate the yield, you can subtract the face amount of the bond from the selling price, and then divide that difference by the face amount. This will give you the percentage increase in value, which represents the effective interest rate.