Annual effective interest rate (See Chapter 17 of the Vernimmen) When interest is paid more frequently than once a year, the annual effective interest rate is used to evaluate the real cost of the resource on an annual basis. To pass from the nominal interest rate to the annual effective interest rate, the following formula is used: (1 + t) = (1 + ka/n)n, where t is the annual effective interest rate, n is the number of interest payments in the year and ka/n the proportional rate during one period, or t = (1 + ka/n)n – 1. Annual effective interest rate (See Chapter 17 of the Vernimmen) When interest is paid more frequently than once a year, the annual effective interest rate is used to evaluate the real cost of the resource on an annual basis. To pass from the nominal interest rate to the annual effective interest rate, the following formula is used: (1 + t) = (1 + ka/n)n, where t is the annual effective interest rate, n is the number of interest payments in the year and ka/n the proportional rate during one period, or t = (1 + ka/n)n – 1. See all terms in the dictionary of finance To know more about it, look at what we have already written on this subject :

You get more than just a glossary on www.vernimmen.com: - A monthly newsletter with over 26,000 subscribers - 610,000 financial data for over 16,000 groups - A 279-question quiz with answers - A text book that has sold 70,000 copies - And all the rest

To find other words in the dictionary of finance, click on the first letter of the word you are looking for:

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Definitions of terms begining with the same letter as "Annual effective interest rate" :

ABS ADR ANAV APE APT APV Abandonment risk Accelerated book-building Accelerated depreciation Accelerated share repurchase Account balancing Accounting criteria of value creation Accounting currency risk Accounting procedures with an impact on earnings Accounts payable Accounts receivable Accretion Accruals Accrued expense Accrued income Acid test ratio Acquisitions Acquisitions Acquisitions Adjustable rate preference shares

Adjustable-rate debt security Adjusted Net Asset Value Adjusted present value, APV Administrative synergy Advance dividend Affirmative covenant Agency costs Agency theory Agent bank Agent fee Agreement in principle All-in cost All-share transaction Alliance Allocative efficiency Alpha Also called order book. Alternative management American Depositary Receipt American option Amortisation Amortisation of the loan Annual Premium Equivalent Annual effective interest rate Annuity

Annuity factor Apparent dilution Appraisal clause Arbitrage Arbitrage pricing theory, APT Arranger Arranging the deal Asset backed commercial paper Asset backed securities Asset beta Asset contribution Asset coverage Asset turnover Assets Associate Associated undertaking Asymmetry - option Asymmetry - shareholder / creditor Asymmetry – issuer/investor At the money Atypical silent partner Auction Auction clause Average life of a bond