No. Nominal interest rate is the rate before adjustments for inflation.
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.
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.
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.
Equivalent RatesThe Equivalent Rates calculation is used to find the nominal annual interest rate compounded n times a year equivalent to a given nominal rate compounded m times per year.Two nominal rates with different compounding frequencies are equivalent if they yield the same amount of interest per year (and hence, at the end of any period of time).Input• nominal annual rate for the given rate• compounding frequency for the given rate• compounding frequency for the equivalent rateResults• equivalent nominal annual rate• equivalent periodic rateExample•A bank offers 14.75 % compounded annually.What would be the equivalent rate compounded monthly?InputGiven nominal annual rate:14.75 %Compounding frequency for given rate:annuallyCompounding frequency for equivalent rate:monthlyResultEquivalent nominal annual rate:13.8377 %Answer: 13.8377%.
If the rate of inflation exceeds the nominal rate of return during the period in question, then the real rate of return can be negative.
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.
Nominal interest rate referes to the rate of interest prior to taking inflation into account. Depending on its application, an inflation and risk premium must be added to the real interest rate in order to obtain the best nominal rate.
A nominal discount rate doesn't take into consideration inflation and other factors. Conversely, a real discount rate would already have inflation included in the rate. The nominal rate is the amount of discount that is state, whereas, the real discount is the actual amount that will be received.
Do you want to know this question for the test? lol
It is 8.16%
it is the nominal size?
the real interest rate equals nominal interest rate minus inflation rate. In the situation the inflation rate increase and the nominal interest rate remains unchanged, therefore the real interest rate must decrease.