# Nominal

The **Nominal** function returns the nominal annual interest rate.

Lending institutions advertise the *nominal* rate of their loans. The nominal interest rate does not take into account the effect of compounding. The *effective* interest rate takes the compounding period into account, and it is a more accurate measure of interest charges.

### Syntax

```
Nominal(effective_rate, num_per_year)
```

Function arguments:

|                     |                                                                             |
| ------------------- | --------------------------------------------------------------------------- |
| **effective\_rate** | The effective interest rate as a decimal (for example, for 7%, input 0.07). |
| **num\_per\_year**  | The number of compounding periods per year.                                 |

### Notes

The general formula for the **Nominal** function is:

<figure><img src="https://files.readme.io/52f0e7a-1.png" alt=""><figcaption></figcaption></figure>

### Examples

```
Nominal(.07, 12)
```

The nominal annual interest rate for an effective rate of 7%, paid 12 times a year (monthly). This example returns 6.78%.

```
Nominal(0.7, 26)
```

The nominal annual interest rate for an effective rate of 7%, paid 26 times a year (bi-weekly). This example returns 6.77%.

```
Nominal([Effective Rate], [Number of Periods])
```

You can use the nominal function to explore the change in the nominal interest rate based on the number of times it compounds.

<figure><img src="https://files.readme.io/5cf4645-image.png" alt="" width="563"><figcaption></figcaption></figure>