NOMINAL

Formulas / NOMINAL
Calculate the nominal interest rate.
NOMINAL(effect_rate, npery)
  • effect_rate - required argument
  • npery - required argument

Examples

  • =NOMINAL(A2,A3)

    The NOMINAL function can be used to calculate the nominal interest rate when given an effective rate and the number of compounding periods per year. For example, this returns the nominal annual interest rate for the effective rate and the number of compounding periods per year.

  • =NOMINAL(A2/12,A3)

    The NOMINAL function can also be used to calculate the nominal interest rate when given an effective rate and the number of compounding periods per month. For example, if the effective rate is given in A2 and the number of compounding periods per month is given in A3, the preceding formula could be used. This will return the nominal annual interest rate.

  • =NOMINAL(A2/4,A3)

    The NOMINAL function can be used to calculate the nominal interest rate when given an effective rate and the number of compounding periods per quarter. For example, if the effective rate is given in A2 and the number of compounding periods per quarter is given in A3, the preceding formula could be used. This will return the nominal annual interest rate.

  • =NOMINAL(A2,A3)

    The NOMINAL function can also be used to calculate the nominal interest rate when given an effective rate and the number of compounding periods per year. For example, if the effective rate is given in A2 and the number of compounding periods per year is given in A3, the preceding formula could be used. This will return the nominal annual interest rate.

Summary

The NOMINAL function calculates the nominal annual interest rate that is based on the effective interest rate and the number of compounding periods per year.

  • The NOMINAL function calculates the nominal interest rate, which is the rate stated on a financial product. The effective annual interest rate, which is the interest rate that is earned due to compounding, is typically used to calculate the nominal interest rate.


Frequently Asked Questions

What is the NOMINAL function?
The NOMINAL function calculates the annual nominal interest rate.
What is the nominal annual interest rate?
The nominal annual interest rate is the effective interest rate multiplied by the number of compounding periods per year.
How is the NOMINAL function related to the EFFECT function?
The NOMINAL function is related to the EFFECT function through the following equation: effective_rate=(1+(nominal_rate/npery))*npery -1.
What is the equation for the NOMINAL function?
The equation for the NOMINAL function is: nominal_rate= (effective_rate/npery)*(1+(1/npery)-1).

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