Question

Which one is better choice for any business research real or nominal rate?

Answer 1

Answer:

Nominal rate is better.

Answer 2

The effective rate is calculated in the following way, where r is the effective annual rate, i the nominal rate, and n the number of compounding periods per year (for example, 12 for monthly compounding): For example, a nominal interest rate of 6% compounded monthly is equivalent to an effective interest rate of 6.17%.