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). | ||
'''Example''' | |||
the amount of interest compounded quarterly is 6.00%/4 | If the quoted quarterly rate is 6.00%, | ||
the amount of interest compounded quarterly is: | |||
= 6.00% / 4 | |||
= 1.50%. | = 1.50%. | ||
Not to be confused with the related ''annual effective'' rate, which in this case is | Not to be confused with the related ''annual effective'' rate, which in this case is: | ||
1.015<sup>4</sup> - 1 | = 1.015<sup>4</sup> - 1 | ||
= 6.14%. | = 6.14%. | ||
Revision as of 11:32, 18 March 2015
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).
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%.
