Nominal interest rate: Difference between revisions

In finance and economics, '''nominal interest rate''' or '''nominal rate of interest''' refers to two distinct things: the rate of [[interest]] before adjustment for [[inflation]] (in contrast with the [[real interest rate]]); or, for interest rates "as stated" without adjustment for the full effect of [[compound interest|compounding]] (also referred to as the '''nominal annual rate'''). An interest rate is called ''nominal'' if the frequency of compounding (e.g. a month) is not identical to the ''basic time unit'' (normally a year).