Final answer:
The contractual interest rate on a bond is often referred to as the stated rate, which is the fixed interest rate paid to bondholders during the bond's lifetime.
Step-by-step explanation:
The contractual interest rate on a bond is often referred to as the stated rate. This rate is the amount that bond issuers agree to pay bondholders as interest during the life of the bond, regardless of changes in the market. The stated rate is typically fixed and does not change over the life of the bond, unlike market rates which fluctuate based on economic conditions. An investor uses the combination of the bond's face value, stated rate, and maturity date along with market interest rates to calculate the bond's present value and determine its attractiveness as an investment.