Effective annual rate and Federal Accounting Standards Advisory Board: Difference between pages

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(EAR).  
(FASAB). ''US Government accounting.''
 
The US Government Accounting Standards Board.  
1.  
 
The Board issues a number of Statements of Federal Financial Accounting Concepts (SFFAC) and Statements of Federal Financial Accounting Standards (SFFAS) which cover aspects of accounting standards similar to those issued to the private sector by the Federal Accounting Standards Board (FASB).
A quoting convention under which interest at the quoted rate is calculated and added to the principal annually.  
 
EAR is the usual quotation basis for instruments with maturities of greater than one year.
 
 
2.
 
A conventional measure which expresses the returns on different instruments on a comparable basis.
 
The EAR basis of comparison is the equivalent rate of interest paid and compounded annually, which would give the same all-in rate of return as the instrument under review.
 
 
'''Example'''
 
GBP overnight interest is conventionally quoted on a simple interest basis for a 365 day year.
 
So GBP overnight interest quoted at 5.11% means:
 
(i)  
 
Interest of 5.11% / 365
 
= 0.014% is paid per day.
 
(ii)  
 
The ''equivalent'' effective annual rate is
 
= 1.00014<sup>365</sup> - 1
 
= 5.24%.


Details of their work and standards are available at: www.fasab.gov. 


== See also ==
== See also ==
* [[Annual effective rate]]
* [[Accounting Standards Board]]
* [[Annual effective yield]]
* [[Federal Accounting Standards Board]]
* [[Annual percentage rate]]
* [[Statement of federal financial accounting concept]]
* [[Capital market]]
* [[Statement of federal financial accounting standard]]
* [[Continuously compounded rate of return]]
* [[Effective annual yield]]
* [[Equivalent Annual Rate]]
* [[LIBOR]]
* [[Nominal annual rate]]
* [[Periodic rate of interest]]
* [[Real]]
* [[Return]]

Revision as of 15:14, 5 May 2013

(FASAB). US Government accounting. The US Government Accounting Standards Board.

The Board issues a number of Statements of Federal Financial Accounting Concepts (SFFAC) and Statements of Federal Financial Accounting Standards (SFFAS) which cover aspects of accounting standards similar to those issued to the private sector by the Federal Accounting Standards Board (FASB).

Details of their work and standards are available at: www.fasab.gov.

See also