0
How do you transform nominal risk free rate into periodic rate?
Wiki User
∙ 13y agoWant this question answered?
Be notified when an answer is posted
Add your answer:
Earn +20 pts
How can you tell which elements of the periodic table are in the same period?
By number of elctrons,protons in them and their reaction rate
Why would the cost of debt increase if the risk free rate increase?
The rate of return on a security, in this case the debt, is defined by rd = rRF + Liquidity Premium + Maturity Risk Premium + Default Risk Premium Thus increasing the risk free rate (rRf) should increase the cost of debt. Hopefully that answers your question...
How does concentraition affect the rate of a chemical reaction?
Usually, increasing concentration of reactants increases the rate of reaction, but increasing concentrations of products reduces the rate of reaction. However, if one reactant is already present in large stoichiometric excess over another, increasing the concentration of that reactant may not increase the rate of reaction at all, and if the free energy of reaction is large enough in magnitude, increasing the concentration of products may not reduce the rate of reaction at all.
What do divergent convergent and transform boundaries have in common?
They are all boundaries between or fractures within the Tectonic Plates forming the Earth's crust. A convergent boundary is that between two approaching plates; usually an ocean-floor plate being subducted beneath the continental plate as the ocean closes. This is happening now to the Pacific Ocean. A divergent boundary is the opposite: the fracture of plate into two parts moving away from each other. The break is closed by upwelling magma. E.g. The Mid-Atlantic Ridge - the Atlantic is presently widening away from this subsea mountain-range at a mean rate of about 25mm/yr. Transform boundaries, or Transform Faults, are shear fractures across the plate at roughly right-angles to the spreading-ridge from which the emanate. They represent the effect of unequal spreading forces. If you look at a relief map of the Atlantic Ocean bed you will see many transform faults to E and W of the Mid-Atlantic Ridge
How can rate constant be determined from the rate law?
The rate constant is the reaction rate divided by the concentration terms.
What is the rate of Risk-Free interest?
Risk-free interest is the rate of interest which exists when the expected risk of the economic transaction is zero. In most cases, the general interest rates in major banks of a country reflects the nominal interest rate, which is risk free. The real interest rate is simply the nominal interest rate minus the rate of inflation.
Formula for risk free rate of return?
Rfrr= [(1+nominal rate)/(1+inflation rate)] - 1* 100
You nominal rate the same as true rate?
No. Nominal interest rate is the rate before adjustments for inflation.
What is an equivalent rate?
Equivalent RatesThe Equivalent Rates calculation is used to find the nominal annual interest rate compounded n times a year equivalent to a given nominal rate compounded m times per year.Two nominal rates with different compounding frequencies are equivalent if they yield the same amount of interest per year (and hence, at the end of any period of time).Input• nominal annual rate for the given rate• compounding frequency for the given rate• compounding frequency for the equivalent rateResults• equivalent nominal annual rate• equivalent periodic rateExample•A bank offers 14.75 % compounded annually.What would be the equivalent rate compounded monthly?InputGiven nominal annual rate:14.75 %Compounding frequency for given rate:annuallyCompounding frequency for equivalent rate:monthlyResultEquivalent nominal annual rate:13.8377 %Answer: 13.8377%.
What is nominal interest?
Nominal InterestA nominal interest rate is the interest rate that does not compensate for inflation. This is used in relation to "effective interest rate" or "real interest rate."" Real Interest Rate = Nominal Interest Rate - Inflation Rate " Improvement suggested by Palash Bagchi.
What does the nominal interest rate mean?
A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.
What does nominal interest rates means?
A nominal interest rate is an interest rate that does not factor in the rate on inflation. Nominal interest rate could also refer to an interest rate that does not adjust for the full effect of compounding.
How does the real interest rate relate to the nominal interest rate?
A real interest rate and a nominal interest rate are quite similar. The only real difference between the two interest rates are that a nominal interest rate include the cost of inflation where as the real interest rate does not.
What is the best nominal interest rate?
Nominal interest rate referes to the rate of interest prior to taking inflation into account. Depending on its application, an inflation and risk premium must be added to the real interest rate in order to obtain the best nominal rate.
Nominal discount rate?
A nominal discount rate doesn't take into consideration inflation and other factors. Conversely, a real discount rate would already have inflation included in the rate. The nominal rate is the amount of discount that is state, whereas, the real discount is the actual amount that will be received.
What is the effective rate for a nominal rate of 8 with semiannual compounding?
It is 8.16%
Suppose a borrower and lender agree on the nominal interest rate to be paid on a loan and the inflation turns out to be higher than they expected Is the real interest rate on this loan higher?
the real interest rate equals nominal interest rate minus inflation rate. In the situation the inflation rate increase and the nominal interest rate remains unchanged, therefore the real interest rate must decrease.
