0
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 rate
Results• equivalent nominal annual rate• equivalent periodic rate
Example•
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%.
Still curious? Ask our experts.
Chat with our AI personalities
Ross
Maxine
JudyAdd your answer:
Earn +20 pts
WHAT IS EQUIVALENT RATE?
If you are given one rate, x/y then multiply (or divide) both numbers by any non-zero number. You will have an equivalent rate.
How can you find a unit rate when give a rate?
If you are given a rate of x to y then the equivalent unit rate is x/y to 1.
What is the effective rate of 18600 invested for one year at 7 and one half percent compounded semiannually?
The annual equivalent rate is 15.5625%. The amount invested is irrelevant to calculation of the equivalent rate.
What is the interest rate of 13.75 percent compounded monthly is equivalent to a daily compounded interest rate?
14.651
What makes two ratios equivalent?
They have a constant rate or ratio.
