Nominal vs. Effective Interest Rates | Difference between Nominal vs. Effective Interest Rates | What is Nominal Interest rate | What is Effective Interest Rate

Nominal interest rate is the interest rate typically quoted on an investment or loan, and which is unadjusted for the effect of compounding.

 Effective interest rate is the true interest rate on an investment or loan because it takes into account the effect of compounding.

Nominal vs. Effective Interest Rates