Nominal Interest Rate: Definition & Equation


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What's the best explanation of nominal interest?

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1. If you know the principal of the loan, the interest due on the loan at maturity, and the applicable unit of time for calculating interest, what formula can you use to calculate the interest rate?

2. What's the formula for a lender to set it's nominal interest rate?

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About This Quiz & Worksheet

Test your ability to calculate the nominal interest rate in this quiz and corresponding worksheet. Topics you will be quizzed on include the formula used to calculate the nominal interest rate and definition of nominal interest.

Quiz & Worksheet Goals

This quiz and worksheet can help you assess your knowledge of:

  • Formula used to set the nominal interest rate
  • Definition of nominal interest
  • Interest rates of loans
  • Calculating the annual nominal interest rate

Skills Practiced

  • Problem solving - use acquired knowledge to solve nominal interest practice problems
  • Making connections - use your knowledge of the concept on calculating the nominal interest rate
  • Information recall - access the knowledge you have gained regarding interest rates of loans

Additional Learning

You can also review the accompanying lesson called Nominal Interest Rate: Definition & Equation. This lesson covers the following objectives:

  • Calculate nominal interest rate
  • Define nominal interest
  • Identify formula used to find the nominal interest rate
  • Work through example problems