Nominal - opposed to the quoted rate. Also called the...

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Chapter 6- Interest Rates 15:35 Nominal ( Quoted or Stated Interest Rates) INom- the contracted/stated rate; the rate that credit card companies , student loan  officers, auto dealers tell you they are charging on loans—not the true rate that requires  monthly payments and other quarterly payments Effective (equivalent annual rate) the annual rate of interest actually being earned as 
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Unformatted text preview: opposed to the quoted rate. Also called the equivalent rate. Effective Annual Rate (EFF%) = 1+[1nom/m]^M -1.0 Inom= interest rate (10%) M= Payment Periods (semi-annually-2) EFF= [1+.10/2] -1 = 0.1025= 10.25%...
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