Quarterly rate: Difference between revisions
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The quarterly rate of interest (or yield) is a quoting convention for the simple interest ''nominal annual rate'' for compounding once per quarter (four times per year). | The quarterly rate of interest (or yield) is a quoting convention for the simple interest ''nominal annual rate'' for compounding once per quarter (four times per year). | ||
For example, | For example, | ||
Not to be confused with the related ''annual effective'' rate, which in this case is 1.015<sup>4</sup> - 1 = 6.14%. | if the quoted quarterly rate is 6.00%, | ||
the amount of interest compounded quarterly is 6.00%/4 | |||
= 1.50%. | |||
Not to be confused with the related ''annual effective'' rate, which in this case is | |||
1.015<sup>4</sup> - 1 | |||
= 6.14%. | |||
Revision as of 14:39, 26 November 2014
The quarterly rate of interest (or yield) is a quoting convention for the simple interest nominal annual rate for compounding once per quarter (four times per year).
For example,
if the quoted quarterly rate is 6.00%,
the amount of interest compounded quarterly is 6.00%/4
= 1.50%.
Not to be confused with the related annual effective rate, which in this case is
1.0154 - 1
= 6.14%.
