Nominal Rate: Nominal interest rate refers the interest rate to which a borrower is ready to pay and the lender is ready to receive. The nominal rate is the rate which is agreed and paid. The real rate of return : The inflation-adjusted rate is known as the real interest rate. Real interest rate helps in the retirement planning. (Effective Annual Rate): The effective interest rate refers to the rate of interest that is paid on an investment or loan or bonds after to take into consideration of compounding over a period of time. (Annual Percentage Rate): The annual percentage rate refers to the rate of interest at which the annual simple interest is calculated. To Identify: The interest which should be earned.

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Chapter 5, Problem 36P

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Nominal Rate: Nominal interest rate refers the interest rate to which a borrower is ready to pay and the lender is ready to receive. The nominal rate is the rate which is agreed and paid.

The real rate of return: The inflation-adjusted rate is known as the real interest rate. Real interest rate helps in the retirement planning.

(Effective Annual Rate): The effective interest rate refers to the rate of interest that is paid on an investment or loan or bonds after to take into consideration of compounding over a period of time.

(Annual Percentage Rate): The annual percentage rate refers to the rate of interest at which the annual simple interest is calculated.

To Identify: The interest which should be earned.

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