Semi-annual rate: Difference between revisions

Revision as of 06:55, 27 August 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 4%, then the periodic interest accruing is:

= 4% x 6/12

= 2% 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 2%.

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

= 1.02² - 1

= 4.04%.

@@ Line 2: / Line 2: @@
-For example if the semi-annual rate is quoted as 10%, then the periodic interest accruing is:
+For example if the semi-annual rate is quoted as 4%, then the periodic interest accruing is:
-= 10% x 6/12
+= 4% x 6/12
-= 5% per six month period.
+= 2% 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 <i>periodic</i> rate per 6 months, which in this case is 5%.
+The semi-annual rate is not to be confused with the <i>periodic</i> rate per 6 months, which in this case is 2%.
 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
+= 1.02<sup>2</sup> - 1
-= 10.25%.
+= 4.04%.