Question

Titan State Bank offers to pay you 6% interest, compounded quarterly. The 6% interest rate is known as the: ANSWER Unselected real rate of interest Unselected nominal interest rate Unselected EAR Unselected rate of inflation

Answer 1

nominal interest rate

Step-by-step explanation:

Titan State Bank offer of 6% interest is a quoted interest rate. A quoted interest rate is also annual payable rate (APR) and in this case, it is compounded quarterly. Additionally, since this quoted rate does not take into account the inflation rate, it is referred as a Nominal interest rate. However, when that nominal rate of 6% is adjusted for inflation, the rate you earn is the Real interest rate which you calculate using the Fisher equation.