Daily rate: Difference between revisions
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The daily rate of interest (or yield) is a quoting convention for the simple interest ''nominal annual rate'' for compounding once per day. | The daily rate of interest (or yield) is a quoting convention for the simple interest ''nominal annual rate'' for compounding once per day. | ||
Not to be confused with the ''annual effective'' rate, which in this case would be 1.00014<sup>365</sup> - 1 = 5.24%. | '''Example''' | ||
The quoted daily rate is 5.11%. | |||
The amount of interest compounded daily is: | |||
5.11% / 365 | |||
= 0.014%. | |||
Not to be confused with the ''annual effective'' rate, which in this case would be: | |||
1.00014<sup>365</sup> - 1 | |||
= 5.24%. | |||
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* [[Periodic rate of interest]] | * [[Periodic rate of interest]] | ||
[[Category: | [[Category:Manage_risks]] | ||
Latest revision as of 18:42, 19 April 2015
The daily rate of interest (or yield) is a quoting convention for the simple interest nominal annual rate for compounding once per day.
Example
The quoted daily rate is 5.11%.
The amount of interest compounded daily is:
5.11% / 365
= 0.014%.
Not to be confused with the annual effective rate, which in this case would be:
1.00014365 - 1
= 5.24%.
