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Definitions:
Effective Rate
The actual interest rate of an investment or loan when the compounding frequency is accounted for, giving a true reflection of the cost or yield.
Compounded Annually
The process of calculating interest on both the initial principal and the accumulated interest from previous periods on a yearly basis.
Twins
Biologically born individuals sharing the same womb simultaneously, often characterized by a close genetic and physical similarity.
Nominal Rate
The stated interest rate of a loan or investment, before adjusting for compounding or inflation.
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