Semi-annual rate

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Revision as of 06:55, 27 August 2015 by imported>Doug Williamson (Align with qualifications material.)
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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%.


See also