In September 2024
Answer to Question #156350 in Financial Math for Mahfuz Hossain Patwary
If the interest rate per year is 16 and the compounding occurs every quarter, then what is the interest rate per compounding period?
R = Rate of Interest per year (16% = 0.16)
m = times (quarters )
Interest Rate (R)
is the nominal interest rate or "stated rate" in percent. r = R/100
Compounding Periods (m)
is the number of times compounding will occur during a period.
Periodic Interest Rate (P)
This is the rate per compounding period, such as per month when your period is year and compounding is 12 times per year.
Periodic Interest Rate (P) = "\\large\\frac{Annual Rate (R)}{Compounding (m)}" = "\\large\\frac{0.16}{4} = 0.04 = 4\\%"
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Dear Aalcs, please use the panel for submitting a new question.
Suppose that a capital of 1000 $ earns 200$ of interest in 4 years. What was the interest rate if compound interest is used? What if simple interest is used?
Dear Alv, please use the panel for submitting a new question.
The Moon company currently (t1) sells for 100 $ . The annual stock price volatility is %10 and risk- free interest rate %8, the price of a call on a company’s stock with strike price 120 $ and time period 2 months. Changes in parameters in period t2 are as shown in the table. t2 Price 110 volatility %8 period 3 months Risk free interest rate %5
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