Conversion of a nominal interest rate into an effective interest rate formula
Financial acronyms
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Description of the Conversion of a nominal interest rate into an effective interest rate formula
Formula for the conversion of a nominal interest rate into an effective interest rate.
Formula
\[ r_{E}=\left ( 1+\frac{r}{n} \right )^{n}-1 \ \]
Symbols
\(n\ \)
Number of payments per year
\(r\ \)
Nominal annual interest rate