What Is Nominal Rate of Return?
The nominal rate of return is the ratio of the nominal return to the principal amount, or the ratio of the face value of a financial instrument to the face value.
Nominal rate of return
Right!
- Chinese name
- Nominal rate of return
- Calculation formula
- Nominal rate of return = annual interest income / par value × 100%
- Definition
- Ratio of nominal income to principal
- in particular
- Financial internal rate of return for the project
- The nominal rate of return is the ratio of the nominal return to the principal amount, or the ratio of the face value of a financial instrument to the face value.
- Specifically, the nominal rate of return of a project can be understood as the project's financial internal rate of return, which is the discount rate at which the present value of the net cash flow of each year of the project is equal to zero during the entire calculation period. The calculation method of the nominal rate of return is FIRR.
- The calculation formula is:
- Nominal rate of return = annual interest income / par value × 100%
- For example, if a bond has a face value of 100 yuan, 10 years of repayment, and annual interest of 5 yuan, the nominal yield is 5%.