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English definition of “effective rate”

effective rate

noun [C]    
FINANCE an actual rate after everything has been considered , rather than a rate that is planned , offered , etc.: Small businesses should benefit from a reduction in the effective rate of capital-gains tax . The building society will knock 1.25% off its standard variable rate , giving an effective rate of 4.34%, for houses built to energy-efficient criteria .
(Definition of effective rate noun from the Cambridge Business English Dictionary © Cambridge University Press)
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