Semi-annual basis: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson No edit summary |
imported>Doug Williamson (Align with qualifications material.) |
||
| Line 6: | Line 6: | ||
'''Q.''' | '''Q.''' | ||
A rate of return - quoted as an annual effective rate - is | A rate of return - quoted as an annual effective rate - is 4.04%. | ||
What is this same rate of return quoted on a semi-annual basis? | What is this same rate of return quoted on a semi-annual basis? | ||
| Line 14: | Line 14: | ||
The same rate of return quoted on a semi-annual basis is: | The same rate of return quoted on a semi-annual basis is: | ||
(1. | (1.0404<sup>(1/2)</sup> -1) x 2 | ||
= | = 4.00%. | ||
Revision as of 06:57, 27 August 2015
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 4.04%.
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:
(1.0404(1/2) -1) x 2
= 4.00%.
