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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 from the Cambridge Business English Dictionary © Cambridge University Press)
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