0
What is the effective rate for a nominal rate of 8 with semiannual compounding?
Wiki User
∙ 6y ago
It is 8.16%
Wiki User
∙ 6y ago
Add your answer:
Earn +20 pts
What is an equivalent rate?
Equivalent RatesThe Equivalent Rates calculation is used to find the nominal annual interest rate compounded n times a year equivalent to a given nominal rate compounded m times per year.Two nominal rates with different compounding frequencies are equivalent if they yield the same amount of interest per year (and hence, at the end of any period of time).Input• nominal annual rate for the given rate• compounding frequency for the given rate• compounding frequency for the equivalent rateResults• equivalent nominal annual rate• equivalent periodic rateExample•A bank offers 14.75 % compounded annually.What would be the equivalent rate compounded monthly?InputGiven nominal annual rate:14.75 %Compounding frequency for given rate:annuallyCompounding frequency for equivalent rate:monthlyResultEquivalent nominal annual rate:13.8377 %Answer: 13.8377%.
What is the corresponding componding?
Corresponding compounding is the interest rate on loan or the financial product restated from nominal interest rate as an interest rate with an annual compound interest.
What is the effective annual rate if the stated rate is 8 percent and compounding occurs semiannually?
17%
What is the nominal rate of interest per annum compounded monthly equvalent to effective interest rate of 12.60 percent per annum?
0.9938% per month, when compounded is equivalent to 12.6% annually.
How do you calculate effective interest rate when you do not know the rate of interest?
That depends on what you DO know. You might consider asking again, being more specific about what information you have. For example, if you know the amount of interest, the principal, and the length of time, you can readily calculate the effective interest rate even if you don't know the nominal value or how often it's compounded.
Effective rate of return?
The nominal rate of return adjusted for more frequent calculations (compounding) than once per annum.
What does the nominal interest rate mean?
A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.
What is the Difference between nominal and effective interest rate?
Nominal interest rate is also defined as a stated interest rate. This interest works according to the simple interest and does not take into account the compounding periods. Effective interest rate is the one which caters the compounding periods during a payment plan. It is used to compare the annual interest between loans with different compounding periods like week, month, year etc. In general stated or nominal interest rate is less than the effective one. And the later depicts the true picture of financial payments.
What does nominal interest rates means?
A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.
What is an equivalent rate?
Equivalent RatesThe Equivalent Rates calculation is used to find the nominal annual interest rate compounded n times a year equivalent to a given nominal rate compounded m times per year.Two nominal rates with different compounding frequencies are equivalent if they yield the same amount of interest per year (and hence, at the end of any period of time).Input• nominal annual rate for the given rate• compounding frequency for the given rate• compounding frequency for the equivalent rateResults• equivalent nominal annual rate• equivalent periodic rateExample•A bank offers 14.75 % compounded annually.What would be the equivalent rate compounded monthly?InputGiven nominal annual rate:14.75 %Compounding frequency for given rate:annuallyCompounding frequency for equivalent rate:monthlyResultEquivalent nominal annual rate:13.8377 %Answer: 13.8377%.
What is the future value of 1000 dollars in 5 years at interest rate of 5 percent compounded semi-annually?
The first responder posted this response:$1,280.08====================================The next responder posted this response:Assuming the 5% interest rate is the nominal annual rate, the first step is to calculate the effective interest rate.ieffective = (1+r/m)m - 1where r is the nominal rate (.05) and m is the compounding periods per year (semiannual = 2 compoundings per year).ieffective = (1+.05/2)2 - 1 = .0506Simply use this effective rate to solveFuture Value = Present Value * (1+i)nwhere i is the effective interest rate and n is the number of years.F = 1000*(1+.0506)5 = $1280.08
What is the continuous compounding rate equivalent to an effective interest rate of 18 percent?
2
Is The effective annual rate increases with increasing compounding frequency?
Yes
What is the corresponding componding?
Corresponding compounding is the interest rate on loan or the financial product restated from nominal interest rate as an interest rate with an annual compound interest.
What is the effective annual rate if the stated rate is 8 percent and compounding occurs semiannually?
17%
What is nominal interest?
Nominal InterestA nominal interest rate is the interest rate that does not compensate for inflation. This is used in relation to "effective interest rate" or "real interest rate."" Real Interest Rate = Nominal Interest Rate - Inflation Rate " Improvement suggested by Palash Bagchi.
Difference between REER and NEER?
Nominal effective exchange rate (NEER) and Real effective exchange rate (REER)
