The effective rate of interest is the contractual rate of interest charged by a lender or promised by a borrower.

Question

Quizplus · Accepted Answer

The effective rate of interest is the actual rate of interest that takes into account the compounding frequency and any fees or charges associated with the loan or investment. It reflects the true cost or return on the money borrowed or invested. The contractual rate of interest may not accurately reflect this true cost or return.

The Effective Rate of Interest Is the Contractual Rate of Interest