ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The nominal rate of return is the amount of money generated by an investment before factoring in expenses such as taxes, investment fees, and inflation. If an investment generated a 10% return, the nominal rate would equal 10%.

Detailed explanation-2: -Interest rates can be expressed in two ways: as nominal rates, or as real rates. The difference is that nominal rates are not adjusted for inflation, while real rates are. 2 As a result, nominal rates are almost always higher, except during those rare periods when deflation, or negative inflation, takes hold.

Detailed explanation-3: -The nominal interest rate (or money interest rate) is the percentage increase in money you pay the lender for the use of the money you borrowed.

Detailed explanation-4: -The real interest rate is additionally called an actual interest rate. The other name for the nominal interest rate is the coupon rate. The rate of real interest is fixed in view of levels of economic inflation. The nominal interest rate is fixed without the impact of economic inflation.

Detailed explanation-5: -Nominal rate of return = Current Investment Value/Original Investment Value – 1.