Semi-annual rate: Difference between revisions

Revision as of 16:21, 7 April 2015

The semi-annual rate is the simple annual interest quotation for compounding twice a year.

For example if the semi-annual rate is quoted as 10%, then the periodic interest accruing is:

= 10% x 6/12

= 5% per six month period.

A semi-annual rate is an example of a nominal annual rate.

The semi-annual rate is not to be confused with the periodic rate per 6 months, which in this case is 5%.

Nor should it be confused with the related annual effective rate, which in this case would be:

= 1.05² - 1

= 10.25%.

@@ Line 1: / Line 1: @@
 The semi-annual rate is the simple annual interest quotation for compounding twice a year.
-For example if the semi-annual rate is quoted as 10%, then the periodic interest accruing is 5% (= 10% x 6/12) per six month period.
+For example if the semi-annual rate is quoted as 10%, then the periodic interest accruing is:
+= 10% x 6/12
+= 5% per six month period.
 A semi-annual rate is an example of a nominal annual rate.
@@ Line 8: / Line 13: @@
 The semi-annual rate is not to be confused with the <i>periodic</i> rate per 6 months, which in this case is 5%.
-Nor should it be confused with the related <i>annual effective</i> rate, which in this case would be = 1.05<sup>2</sup> - 1 = 10.25%.
+Nor should it be confused with the related <i>annual effective</i> rate, which in this case would be:
+= 1.05<sup>2</sup> - 1
+= 10.25%.