April 30, 2013
A thorough understanding of interest rates and their applications is a prerequisite for most financial certifications, but candidates are often found to be lacking in knowledge about this topic. This post will help you clarify doubts related to the different methods of representation of interest rates and develop an intuitive understanding of the topic. Other than posts like this one, we are also endeavoring to help candidates ace their CFA® and FRM exams, through a series of Free Webinars!! So letâ€™s look at the different types of interest rates and their interpretations.
Type of interest rate representations:
Conversions between the interest rate representations:
NIR =Nominal Interest Rate
EAIR = Effective Annual Interest Rate
n=frequency of compounding of interest
Hope you found this useful. In case you require any further help on this topic or any other topic related to finance, please drop in a comment below.