Homework SourseA nominal rate could best be described as the rate that tell
A nominal rate could best be described as?
the rate that tells you what you really earn on an annual basis
The rate that you use in calculations
Its hard to say exactly
The stated rate that ignores compounding
The rate that if squared equals the periodic rate
| the rate that tells you what you really earn on an annual basis | ||
| The rate that you use in calculations | ||
| Its hard to say exactly | ||
| The stated rate that ignores compounding | ||
| The rate that if squared equals the periodic rate |
Solution
Correct option is > The stated rate that ignores compounding
Nominal rate is stated rate by bank or financial institutions which is not annualized or say effective interest rate. As it is not effective rate it simply ignores compounding effect.
