Different types of rates of interest

CCidra9y ago

Hello Sir, How to tell the difference which interest rate is used in particular situation for loans/instruments. Fixed interest rate Market rate Nominal rate Effective rate Original effective rate Effective rate under revised payment schedule Thanks in Advance!

P2-D2Tutor9y ago#1

Nominal/coupon interest is the rate attached to the bond itself and is applied to the nominal value of the bond. This is a fixed rate of interest on the bond. Effective rate is the rate calculated taking into account the substance of the bond (i.e. being issued at a discount and redeemed at a premium). The effective rate is essentially the market rate and is the original effective rate. Any change to the effective rate due to any impairment is then the revised effective rate. Thanks

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