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Effective interest rate - Definition and Overview |
| Related Words: Acid, Active, Adequate, Basic, Charismatic, Cogent, Corrosive, Cutting, Direct, Driving, Dynamic, Efficient, Enchanting |
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In contrast to a nominal interest rate, the period of time after that the interest is credited coincides with the basic time unit (normally one year). Thus, given an interest rate of i, an initial capital is increased by the factor (1+i) after each time unit.
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