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Effective Annual Rate & Nominal Rate

Updated on 07/12/2024

Activity Overview

In this activity, students use the effective annual rate calculation to compare the nominal rates of various financial instruments.

About the Lesson

In this activity, students will evaluate different scenarios, including:

  • Given a nominal rate and the number of compounding periods, determine the effective annual rate.
  • Given an effective annual yield and the number of compounding periods, determine the nominal interest rate.