What does ER mean in ACCOUNTING
Explicit Rate is a type of interest rate that is stated explicitly in the loan or promissory note. It is based on a predetermined rate agreed upon by both the borrower and lender, as opposed to an Implicit Rate which is determined by calculating the accrued interest payments over the life of the loan.
ER meaning in Accounting in Business
ER mostly used in an acronym Accounting in Category Business that means Explicit Rate
Shorthand: ER,
Full Form: Explicit Rate
For more information of "Explicit Rate", see the section below.
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Essential Questions and Answers on Explicit Rate in "BUSINESS»ACCOUNTING"
What is Explicit Rate?
Explicit Rate is a type of interest rate that is stated explicitly in the loan or promissory note. It is based on a predetermined rate agreed upon by both the borrower and lender.
How does an Explicit Rate differ from an Implicit Rate?
An Implicit Rate is determined by calculating the accrued interest payments over the life of the loan, while an Explicit Rate is based on a predetermined rate agreed upon by both parties.
Is an Explicit Rate fixed or variable?
An Explicit Rate can be either fixed or variable, depending on what has been agreed upon by both parties involved in the loan agreement.
Are there any potential benefits associated with using an Explicit Rate?
Yes, using an Explicit Rate can offer some potential benefits compared to an Implicit Rate, such as greater transparency and predictability for both parties involved in the loan agreement. Additionally, it can provide more flexibility for borrowers who may need to make changes to their repayment terms down the line.
Who typically pays for an explicit rate?
Typically, it will be either one party (the borrower) or split evenly between both parties involved in a loan agreement. This will depend on what terms have been agreed upon beforehand between them.
Final Words:
In conclusion, explicit rates are established through direct negotiations between borrowers and lenders and can offer several advantages over implicit rates including greater transparency and predictability in repayment terms, as well as additional flexibility if needed down the line.
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