[amp_mcq option1=”nominal rates” option2=”periodic rates” option3=”effective annual rates” option4=”all of above” correct=”option4″]<\/p>\n
The correct answer is D. all of the above.<\/p>\n
Nominal interest rate is the rate of interest that is stated on a loan or investment. It is the rate that is used to calculate the interest that is paid or earned on the loan or investment.<\/p>\n
Periodic rate is the rate of interest that is charged or paid on a loan or investment over a period of time. It is usually expressed as a percentage per year.<\/p>\n
Effective annual rate (EAR) is the actual rate of interest that is paid or earned on a loan or investment over a year. It takes into account the effects of compounding, which is when interest is earned on interest.<\/p>\n
Here is a table that summarizes the differences between nominal interest rate, periodic rate, and effective annual rate:<\/p>\n
| Nominal interest rate | Periodic rate | Effective annual rate |
\n| — | — | — |
\n| The rate of interest that is stated on a loan or investment. | The rate of interest that is charged or paid on a loan or investment over a period of time. | The actual rate of interest that is paid or earned on a loan or investment over a year. It takes into account the effects of compounding. |<\/p>\n
I hope this helps!<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”nominal rates” option2=”periodic rates” option3=”effective annual rates” option4=”all of above” correct=”option4″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-44979","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"\n