Effective to Nominal
Given an effective interest rate we can calculate the equivalent nominal interest rate.
n - is the number of compounding periods in a year
Effective to Annual Compounding
These are the same because all effective interest rates have annual compounding.
Effective to Semi-Annual Compounding
We have an effective interest rate of 10%.
What is the equivalent nominal interest rate with semi-annual compounding.
Effective to Quarterly Compounding
We have an effective interest rate of 10%.
What is the equivalent nominal interest rate with quarterly compounding.
Effective to Monthly Compounding
We have an effective interest rate of 10%.
What is the equivalent nominal interest rate with monthly compounding.
Effective to Daily Compounding
We have an effective interest rate of 10%.
What is the equivalent nominal interest rate with daily compounding.
Effective to Continously Compounded
The compounding frequency could be increased indefinitely to become continous
Taking the limits we get
ln - is the natural logarithm function
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