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The 3 month Jibar is derived from 3-month NCD rates. Likewise the 1-month Jibar is derived from 1-month NCDs. The Jibar rates are all quoted as nominal annual rates, which means that the interest you will receive on a 3-month investment at Jibar will be calculated as (3M Jibar/4) x (amount invested). Now if you are able to invest money for 3 months at the 3-month Jibar, you can obviously re-invest it after 3 months at the new 3-month Jibar. If the new 3M rate remains exactly the same then obviously it becomes your NACQ. The point is that it may not be the same as 3 months ago.
Thus the 1-month Jibar can be seen as a NACM and the 6-month Jibar as a NACSA. A vanilla bond coupon rate is an even better example of a NACSA because it never changes.
Now here is a challenge. If the 6-m Jibar is regarded as a NACSA what is the 9-month Jibar then?
The short answer is that money market rates are never quoted as compounded rates - they are nominal annual rates. It depends on how the investment (or loan) is treated that determines whether they become NA compounded rates. If you invest in a 9-m NCD at 10% p.a. and re-invest the total maturity value after 9 months for another 9 months at 10% p.a., your effective interest interest rate earned for the first 12 months will be slightly more than 10%.
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Is the return of 12 percent compounded annually is the same as a return of 1 percent per month?
Only if the 1% per month is compounded annually and not monthly.
How many years will it take an investment to triple at 8 percent interest compounded monthly?
At 8% per month, compounded, it will take just 1.2 years. However, with monthly interest such that its annual compounded equivalent is 8% (roughly 0.64% each month), it will take 14.27 years.
What are the different types of interest earned on principle?
simple(interest is earned on the original principal) $100 earning 10% per month with earn $10 every month and compound(interest is compounded every set amount of time e.g. monthly and a new principal is derived) $100 earning 10% per month compounded monthly will earn $10 the first month after which it is compounded making the new principal $110 the next month will earn $11 and so on
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 much will 25000 be worth in 18 years if it is invested at 6 percent compounded monthly?
$73053.88 when compounded month your yearly rate would be 0.061678% * * * * * True, but in real life the quoted interest rate, "6 percent compounded monthly", should read "an interest rate, such that, if it were compounded monthly, would give an annual equivalent rate of 6 percent". The equivalent of 6% annual is 0.487% monthly since 1.0048712 = 1.06
