Semi-annual basis: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Expand to assist clarity, semi-annual not = periodic rate per 6 months.) |
imported>Doug Williamson No edit summary |
||
| Line 1: | Line 1: | ||
The quotation of a rate of return, or a cost, on the basis of a nominal annual rate for compounding twice per year. | The quotation of a rate of return, or a cost, on the basis of a nominal annual rate for compounding twice per year. | ||
<b>Example</b> | <b>Example</b> | ||
A rate of return quoted as an annual effective rate is 10.25%. | '''Q.''' | ||
A rate of return - quoted as an annual effective rate - is 10.25%. | |||
What is this same rate of return quoted on a semi-annual basis? | |||
'''A.''' | |||
The same rate of return quoted on a semi-annual basis is: | The same rate of return quoted on a semi-annual basis is: | ||
| Line 15: | Line 22: | ||
* [[Semi-annual rate]] | * [[Semi-annual rate]] | ||
[[Category: | [[Category:Long_term_funding]] | ||
[[Category: | [[Category:Cash_management]] | ||
Revision as of 14:49, 19 October 2013
The quotation of a rate of return, or a cost, on the basis of a nominal annual rate for compounding twice per year.
Example
Q.
A rate of return - quoted as an annual effective rate - is 10.25%.
What is this same rate of return quoted on a semi-annual basis?
A.
The same rate of return quoted on a semi-annual basis is:
(1.1025(1/2) -1) x 2
= 10%.
