Talk:Nominal interest rate

message: First, the equation given "real interest rate + expected inflation = nominal inflation rate," might read "real interest rate + expected inflation = nominal interest rate".  I have never heard of a nominal inflation rate in macroeconomic theory.  Moreover, wikipedia should not that this is an approximation.  The equation relating the three is  (1+R)/(1+pi)=1+r where R is nominal, pi is inflation, r is real.
Gkapur 19:40, 12 March 2007 (UTC)
thread_title: Some Notes

message: The recent changes seem to exclude a valid definition, that is, nominal interest rates are the stated annual rate without proper adjusting for compounding. See, for example, http://www.getobjects.com/Components/Finance/TVM/iy.html . If there is a disagreement about the use of this term, grateful it be documented.
And to say it is used "instead of simple interest" appears to understate the situation: they are distinct and different. If it is used instead of simple interest, it is used incorrectly. See for example the financial dictionary at http://www.specialinvestor.com/dictionary/  where nominal interest is precisely defined:
Nominal interest: Definition
An effective rate per period multiplied by the number of periods in a year.
From msn encarta: simple interest - interest that is not compounded (more at their page).
I am editing back to include useful definition and example, please document objections if any.--Gregalton 02:44, 5 February 2007 (UTC)
replies: text: I would like to add: I'm not sure I agree with the premise, that a usage that is common and colloquial should not figure here. The text makes no argument that one use or another is more "correct," simply that they are used. You seem to be referring only to dictionaries/glossaries.--Gregalton 12:46, 21 March 2007 (UTC)

text: I have no difficulty with periodic being a related term, although I have usually heard the periodic rate as being per period, i.e. per month for monthly compounding. And you are quite right that two different nominal rates are quite ambiguous - they DO NOT have sufficient information to tell you the effective annual rate without the compounding period. But, for example, how often do you see advertisements that say 8% APR or 8% per year (if you live in the US)? In ads this issue is often glossed over - but in the US the rate is usually nominal per year (i.e. compounding monthly). So, I would highly support putting more information here that "red flags" the fact that a nominal rate without a compounding period is not sufficient (it's underspecified). I also agree that convention should dictate this, and it should be a well-understood convention (always annual compounding unless specified), but I've seen this come up often enough - particularly for consumer products - that I can say that these conventions are violated frequently.--Gregalton 13:17, 21 March 2007 (UTC)
thread_title:  Nominal interest rate definition here differs from most sources 

message: It is not clear to me. Perhaps by communicating what it is your objection is, we could find some compromise. Without knowing it, however, it appears to be no more than a destructive edit to avoid the issue.--Gregalton 17:46, 10 February 2007 (UTC)
thread_title:  Rather than redirect, could you explain what your position is? 

message: What happens with a negative inflation of i=-1? And the second formula seems exact to me.
Darcourse (talk) 06:07, 29 October 2020 (UTC)
thread_title:  Nominal versus real interest rate