nominal rate of interest definition

nominal rate of interest

Bank deposits: Published or stated interest rate on deposits, expressed in current dollars and unadjusted for compounding and the effects of inflation. After such adjustments it is called real rate of interest. Also called nominal interest rate or nominal rate of return.

Bank loans: Interest rate specified to be paid on the amount borrowed, and which is less than the effective rate of interest when the entire interest amount is deducted immediately on disbursement of the loan.

Securities: Interest rate quoted on the face and in the body of a security, computed on its par value (and not the market value). Also called nominal yield.

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