Which type of note has a stated interest rate?

An interest-bearing note is characterized by the inclusion of a stated interest rate, which indicates the amount of interest that will be paid over the life of the note. This stated interest rate is crucial, as it directly affects the total cost of borrowing and the yield received by the investor. Interest-bearing notes provide clarity and certainty regarding the anticipated interest payments and are commonly used in various financial transactions.

In contrast, a noninterest-bearing note does not have an explicit interest rate; instead, it may involve a discount from the face value, with the difference representing the implied interest. Secured notes are backed by collateral, but that does not inherently mean they have a stated interest rate. Convertible notes offer the option to convert into equity but can either be interest-bearing or noninterest-bearing, depending on their specific terms. The defining feature of an interest-bearing note is its explicit stated interest rate, making this option the correct choice.