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imported>Doug Williamson |
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| Simple interest is a method of calculating and quoting interest which takes no account of interest on interest.
| | <i>Capital adequacy</i>. |
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| So the total interest for a given period is calculated simply by multiplying or dividing the simple annual interest rate by the relative length of the interest period.
| | The supervisory assignment of specialised lending - for example commercial real estate (CRE) loans - into one of a small number of broad risk categories for the purposes of capital adequacy calculations. |
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| | | The loans in the higher risk categories are given correspondingly greater (standardised) percentage risk weightings. |
| Simple interest is the usual basis of quotation for periods up to and including one year.
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| <span style="color:#4B0082">'''Example: Simple interest calculation'''</span>
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| When the daily rate of GBP interest is quoted as 5.11%,
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| this means that the amount of interest per day is given by the quoted simple annual rate of 5.11%,
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| multiplied by 1/365 (to reflect one day in a 365 day year):
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| = 5.11% x (1/365)
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| = 0.014% per day.
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| == See also == | | == See also == |
| * [[Compound]]
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| * [[Compound interest]]
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| * [[Compounding effect]]
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| * [[Day count conventions]]
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| * [[Effective annual rate]]
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| * [[Interest]]
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| * [[LIBOR]]
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| * [[Money market]]
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| * [[Nominal annual rate]]
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| * [[Periodic rate of interest]]
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| * [[Periodic yield]]
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| ==Other links==
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| [http://www.treasurers.org/node/9356 Students: Simple solutions, The Treasurer, September 2013]
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| [[Category:Cash_management]] | | * [[Capital adequacy]] |
| [[Category:Financial_products_and_markets]] | | * [[ADC loan]] |
| [[Category:Liquidity_management]] | | * [[Financial Services Authority]] |
Revision as of 14:13, 13 May 2016
Capital adequacy.
The supervisory assignment of specialised lending - for example commercial real estate (CRE) loans - into one of a small number of broad risk categories for the purposes of capital adequacy calculations.
The loans in the higher risk categories are given correspondingly greater (standardised) percentage risk weightings.
See also
