Question

Which of these is the interest rate that is actually observed in financial markets? real risk-free rate real interest rates nominal interest rates market premium

Answer 1

Answer: Nominal interest rate.

Explanation:

Nominal interest rate is the interest rate before inflation is taken into account.

Nominal interest rate is also the advertised or interest rate stated on a loan, without adding any other fees or compounding the interest.

The nominal interest rate is quoted on bonds, loans etc. It is the advertised rate without taking into cognisance inflation, inflation, taxation and compounding interest.