Finance interest: Difference between revisions
From wikinotes
| Line 23: | Line 23: | ||
<blockquote> | <blockquote> | ||
Does not account for inflation. | Does not account for inflation. | ||
<math> | |||
( 1 + \texttt{periodic-return})^{ \texttt{num-periods} } - 1 | |||
</math> | |||
<syntaxhighlight lang="yaml"> | <syntaxhighlight lang="yaml"> | ||
principal: amount lent | principal: amount lent | ||
compounding-period: interval that interest is added to the principal (ex | compounding-period: interval that interest is added to the principal (ex. quarterly) | ||
periodic-return: percentage paid per compounding-period | periodic-return: percentage paid per compounding-period | ||
num-periods: number of periods until complete (or in observed timespan ex | num-periods: number of periods until complete (or in observed timespan ex. 1yr) | ||
</syntaxhighlight> | </syntaxhighlight> | ||
< | <syntaxhighlight lang="python"> | ||
if nominal_rate == 5%: | |||
5$ interest on each 100$ paid | |||
</syntaxhighlight> | |||
</ | |||
https://www.educba.com/real-interest-rate-formula/ | https://www.educba.com/real-interest-rate-formula/ | ||
Revision as of 03:50, 2 November 2021
Overview
TODO:
how are interest rates set?
Terminology
yield: return: nominal: real: effective:
Rate Types
Nominal Interest Rate
Does not account for inflation.
principal: amount lent compounding-period: interval that interest is added to the principal (ex. quarterly) periodic-return: percentage paid per compounding-period num-periods: number of periods until complete (or in observed timespan ex. 1yr)if nominal_rate == 5%: 5$ interest on each 100$ paidReal Interest Rate
Nominal interest rate, with the inflation-rate removed.
Emphasizes value at end of period.
Effective Interest Rate
Annual Interest Rate
