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The Symbols Used in a Language Are Arbitrary

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The symbols used in a language are arbitrary. What does this mean?


Definitions:

Nominal Rate

The stated interest rate of a financial instrument, not accounting for inflation or compounding effects.

Effective Rate

The actual interest rate on a loan or investment, taking into account the effects of compounding and other factors.

Face Rate

The interest rate stated on the face of a bond or a loan document, which determines the interest payments that the issuer will make.

Contract Rate

This refers to the interest rate stated in a contract that determines the amount of interest owed on a loan or financial agreement.

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