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DEFINITION of 'Nominal Interest Rate'. The interest rate before taking inflation into account. The nominal interest rate is the rate quoted in loan and deposit agreements. The equation that links nominal and real interest rates is: (1 + nominal rate) = (1 + real interest rate) (1 + inflation rate).
Contract Rate. The contract rate; also called the coupon rate, stated rate, or nominal rate; is the interest percentage listed on the face of a note or bond.In other words, this is the interest rate that will be paid on the principle balance for the life of the note or bond.emember, the contact rate is the amount of interest paid or received in cash for a bond or note. This is not the necessarily the interest expense recorded on the books. Interest expense is calculated based on the market rate of interest.