Finance interest: Difference between revisions
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https://corporatefinanceinstitute.com/resources/knowledge/finance/effective-annual-interest-rate-ear/ | https://corporatefinanceinstitute.com/resources/knowledge/finance/effective-annual-interest-rate-ear/ | ||
https://www.calculatorsoup.com/calculators/financial/effective-interest-rate-calculator.php | |||
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Revision as of 04:05, 2 November 2021
Overview
TODO:
how are interest rates set?
Terminology
yield: return: nominal: real: effective: 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)
Rate Types
Nominal Interest Rate
Does not account for inflation.
if nominal_rate == 5%: 5$ interest on each 100$ paidReal Interest Rate
Accounts for inflation.
Effective Interest Rate
Accounts for compounding interest (but not inflation?).
https://www.calculatorsoup.com/calculators/financial/effective-interest-rate-calculator.php
Annual Interest Rate