Nominal Interest Rate Formula: An Overview of Academic Research

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The nominal interest rate formula (IRF) in Forex trading is a calculation used to determine the amount of interest rate charged or earned on a given foreign currency pair. This calculation takes into account the quoted interest rate of the two countries involved in the currency pair, the spot exchange rate for the currency pair, and the amount of time since the position was opened. The IRF formula is important for getting an understanding of the true value of a position, as different currencies can have different interest rates, depending on the country they are issued in. By using the IRF formula, traders can accurately assess the true cost of a position in a given currency pair.