Semi-annual rate and Semi-fixed cost: Difference between pages

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imported>Doug Williamson
(standardise calculation presentation.)
 
imported>Doug Williamson
(Classify page.)
 
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The semi-annual rate is the simple annual interest quotation for compounding twice a year.  
A semi-fixed cost is where the cost is fixed within limited ranges of activity, but which increases when the level of activity becomes greater than this limited range.


Coupon rates on bonds paying interest twice per year are generally expressed as semi-annual rates.
An example of a semi-fixed cost is where extra supervision salaries have to be paid each time an extra shift is worked.


This makes rates broadly comparable, while also enabling the amounts of fixed interest coupons to be determined easily.
If the total semi-fixed cost were plotted on the y-axis of a graph, with the x-axis being the level of activity, the shape of the cost curve would be a series of steps going up.
 
 
<span style="color:#4B0082">'''Example: Semi-annual rate calculation'''</span>
 
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 <i>periodic</i> rate per 6 months, which in this case is 2%.
 
 
Nor should it be confused with the related <i>annual effective</i> rate, which in this case would be:
 
= 1.02<sup>2</sup> - 1
 
= 4.04%.




== See also ==
== See also ==
* [[Effective annual rate]]
* [[Fixed cost]]
* [[Certificate in Treasury Fundamentals]]
* [[Variable cost]]
* [[Certificate in Treasury]]
* [[CertFMM]]
* [[Nominal annual rate]]
* [[Semi-annual basis]]
* [[Periodic rate of interest]]
* [[Periodic yield]]
* [[Quarterly rate]]


[[Category:Long_term_funding]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Manage_risks]]
[[Category:Cash_management]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]

Revision as of 15:21, 3 April 2021

A semi-fixed cost is where the cost is fixed within limited ranges of activity, but which increases when the level of activity becomes greater than this limited range.

An example of a semi-fixed cost is where extra supervision salaries have to be paid each time an extra shift is worked.

If the total semi-fixed cost were plotted on the y-axis of a graph, with the x-axis being the level of activity, the shape of the cost curve would be a series of steps going up.


See also