Question

Define the stated (quoted) or nominal rate inom as well as the periodic rate iper

Answer 1

Nominal interest rate is also defines as the stated (quoted) interest rate.  This interest works according to the simple interest and does not take into account the compounding periods. 

Effective interest rate is the one which caters the compounding periods during a payment plans. It is used to compare the annual interest between loans with different compounding periods like weeks, months, year  and etc.In general stated or nominal interest rate is less than the effective one.

The stated interest rate is the periodic rate times the number of periods per year.  Nominal rate are not comparable unless there compounding periods are the same, effective interest rate correct this by ''converting'' nominal rate into annual compound interest.

In many cases depending on the local regulations, interest rates, quoted by the lenders and in advertisements are based on the nominal, not effective interest rate, and hence may understate the interest rate compared to the equivalent annual rate.

 

Answer 2

Nominal interest rate is the one calculated before taking the inflation into account. It is mainly the stated interest rate for a given bond or a loan. It is the actual monetary price that borrowers pay to the lenders.

However, stated/ quoted annual interest rate is the return on investment or a specified rate on the savings or the loans. It does not take into account the effect of compounding that increases the rate you pay or earn.