NOMINAL INTEREST RATE Definition

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NOMINAL INTEREST RATE is the stated, or named, interest rate in a note or contract; the nominal interest rate may differ from the true or effective interest rate. See EFFECTIVE INTEREST RATE.

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UNDERWATER, in securities, is securities held in a portfolio with an unrealized market loss. Selling them would mean real­izing the loss and, according to statutory accounting, a reduction in policyholders' surplus.

ABNORMAL RETURNS is the difference between the actual return and that is expected to result from market movements (normal return).

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