Finance interest: Difference between revisions
From wikinotes
Line 66: | Line 66: | ||
</blockquote><!-- Effective Interest Rate --> | </blockquote><!-- Effective Interest Rate --> | ||
== Annual Percentage Rate == | |||
<blockquote> | |||
https://corporatefinanceinstitute.com/resources/knowledge/finance/annual-percentage-rate-apr/ | |||
</blockquote><!-- Annual Percentage Rate --> | |||
</blockquote><!-- Rate Types --> | </blockquote><!-- Rate Types --> |
Revision as of 04:16, 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
Annual Percentage Rate
https://corporatefinanceinstitute.com/resources/knowledge/finance/annual-percentage-rate-apr/