Nominal annual rate: Difference between revisions
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The rate of return ''per annum'' named or quoted in a market, under the quoting convention for the given market. | The rate of return - or cost of borrowing - ''per annum'' named or quoted in a market, under the quoting convention for the given market. | ||
Revision as of 16:59, 25 October 2015
The rate of return - or cost of borrowing - per annum named or quoted in a market, under the quoting convention for the given market.
Market quotations are usually given per annum, and for this reason the term nominal rate is often used interchangeably with nominal annual rate.
Example
GBP overnight interest payable at the periodic rate of 0.014% per day, would conventionally be quoted on a nominal annual basis as:
= 365 x 0.014%
= 5.11%.
Not to be confused with the effective annual rate.
Sometimes also known as market rate or nominal rate.
