What is the term for the interest rate financial institutions quote?
A)Nominal
B)Effective
C)Annual
D)Real

Question

Quizplus · Accepted Answer

The term for the interest rate financial institutions quote is called the nominal rate. It is the rate that is stated upfront without taking into consideration other factors that may affect the real or effective rate.

Answer: A and C
 Both A and C are correct because the nominal rate is also known as the annual rate, which is the rate quoted for a whole year. The nominal rate does not take into consideration compounding, which makes the effective rate higher than the nominal rate.

What Is the Term for the Interest Rate Financial Institutions