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Last updated 3:47 PM on 2/9/24
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4 Terms
1
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“Posted” interest rate on bank loan
The rate of interest the bank will get if the company does not default (go bust). It is in effect the "contractual rate of interest".
2
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Effective interest rate on bank loan
The interest payment on the loan the bank expects to get divided by the loan which takes into account the possibility of default and therefore is always lower.
3
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Nominal interest rate
Makes no allowance for interest rate
4
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Real interest rate
Takes into account changes in prices.
Note 
Flashcards (118)