Effective Interest Rate vs Nominal Interest Rate | (EAR vs APR) | Explained with Examples

In this lesson, we explain what Nominal Interest Rate (APR) and Effective Interest Rate (EAR) are. We explain and show the formula of how to calculate the effective interest rate. We also explain and go through examples of the difference between the effective interest rate (EAR) and nominal interest rate (APR). We explain the effect of compounding thoroughly here. Check it out.

Timestamps:
Nominal interest rate explained: 00:16
Effective interest rate explained: 00:39
Effective interest rate Formula: 05:21
Effective interest rate calculation examples: 06:02
Nominal vs Effective Interest Rate table: 09:46

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