Q345
An interest rate which is quoted by brokers, banks and other financial institutions is classified as
A.
annuity rate
B.
perpetuity rate
C.
nominal rate
AnswerD.
external rate of return
Answer: Option C
Solution
Answer: Option C
Solution:
An interest rate which is quoted by brokers, banks and other financial institutions is classified as nominal rate. Nominal interest rate refers to the interest rate before taking inflation into account. Nominal can also refer to the advertised or stated interest rate on a loan, without taking into account any fees or compounding of interest.