Effective interest rate

(EIR).

1. Financial reporting.

In relation to a financial asset or financial liability, the internal rate of return of the cash flows of the instrument, including the initial cost and the final maturity amount.

2. Hedging.

A hedged interest rate achieved, after interest rate risk management.

For example, the hedged interest rate achieved when hedging an interest rate exposure with an FRA.

3. Interest rates - comparability.

Annual effective rate.

See also

• Annual effective rate
• Effective
• Effective interest method
• Effective rate of interest
• Financial asset
• Financial liability
• Financial reporting
• Forward rate agreement (FRA)
• Hedging
• Interest rate
• Internal rate of return