Finance interest: Difference between revisions
From wikinotes
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yield: | yield: | ||
return: | return: | ||
principal: amount lent | principal: amount lent | ||
compounding-period: interval that interest is added to the principal (ex. quarterly) | 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 | ||
</syntaxhighlight> | </syntaxhighlight> | ||
</blockquote><!-- Terminology --> | </blockquote><!-- Terminology --> |
Revision as of 04:11, 2 November 2021
Overview
TODO:
how are interest rates set?
Terminology
yield: return: principal: amount lent compounding-period: interval that interest is added to the principal (ex. quarterly) periodic-return: percentage paid per compounding-period
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?).
TODO:
could you sub in real-interest-rate to account for inflation here?
https://www.calculatorsoup.com/calculators/financial/effective-interest-rate-calculator.php