# Nominal

The **Nominal** function returns the nominal annual interest rate.

Lending institutions advertise the *nominal* rate of their loans. The nominal interest rate does not take into account the effect of compounding. The *effective* interest rate takes the compounding period into account, and it is a more accurate measure of interest charges.

**Nominal** is part of the set of financial functions that Sigma supports.

## Syntax

Nominal(effective_rate, num_per_year)

The **Nominal** function syntax has the following arguments:

- effective_rate
- Required.
- Effective interest rate
- To use 7%, use the value 0.07.
- num_per_year
- Required.
- Number of compounding periods per year

The general formula for the **Nominal** function is:

## Examples

Nominal(.07, 12)

The nominal annual interest rate for an effective rate of 7%, paid 12 times a year (monthly). This example returns 6.78%.

Nominal(0.7, 26)

The nominal annual interest rate for an effective rate of 7%, paid 26 times a year (bi-weekly). This example returns 6.77%.

Nominal([Effective Rate], [Number of Periods])

You can use the nominal function to explore the change in the nominal interest rate based on the number of times it compounds.

## Related functions

- Effect
- NOMINAL function in Microsoft documentation