Finance interest: Difference between revisions
From wikinotes
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Nominal interest rate, with the inflation subtracted from it. | Nominal interest rate, with the inflation subtracted from it. | ||
<math> | <math> | ||
\frac | \text{real-interest-rate} = \frac | ||
{1 + \text{nominal-interest-rate}} | {1 + \text{nominal-interest-rate}} | ||
{1 + \text{inflation-rate}} | {1 + \text{inflation-rate}} | ||
Revision as of 02:30, 2 November 2021
Overview
TODO:
how are interest rates set?
Terminology
yield: return: nominal: real: effective:
Rate Types
Nominal Interest Rate
nominal_rate = 5% 5$ interest for each 100$
- Does not account for inflation
Real Interest Rate
Nominal interest rate, with the inflation subtracted from it.
Effective Interest Rate
Annual Interest Rate
