Daily rate: Difference between revisions
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imported>Doug Williamson m (Category added 9/10/13 and spacing) |
imported>Doug Williamson m (Added more space so that calculations are clearer) |
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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. | ||
For example | |||
For example: | |||
if 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%. | 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]] |
Revision as of 15:13, 20 September 2014
The daily rate of interest (or yield) is a quoting convention for the simple interest nominal annual rate for compounding once per day.
For example:
if 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%.