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Nominal InterestA nominal interest rate is the interest rate that does not compensate for inflation.

This is used in relation to "effective interest rate" or "real interest rate."

" Real Interest Rate = Nominal Interest Rate - Inflation Rate " Improvement suggested by Palash Bagchi.

Q: What is nominal interest?
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Nominal InterestA nominal interest rate is the interest rate that does not compensate for inflation.

This is used in relation to "effective interest rate" or "real interest rate."

" Real Interest Rate = Nominal Interest Rate - Inflation Rate " Improvement suggested by Palash Bagchi.

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A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.

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A real interest rate and a nominal interest rate are quite similar. The only real difference between the two interest rates are that a nominal interest rate include the cost of inflation where as the real interest rate does not.

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Annual Interest Rate divided by 12= Monthly Interest Rate

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A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.

View page
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