The risk free rate has to meet two criteria:
(1) there can be no risk of default associated with its cash flows and
(2) there can be no reinvestment risk
Using these conditions, the appropriate risk free rate to use to obtain expected returns should
be a no default (usually government) zero coupon bond that is matched up to when the cash flow or flows that are being discounted occur.
But it is usually appropriate to equate the payback duration of the risk free asset to the duration of the cash flows of a project/investment being compared, usually U.S. government bond (10 year) rates as risk free rates.
Pre-calculated risk-free rates based on the Svensson method for USD and EUR can be found at www.quaestorial.com
There is also audit-proof documentation available for each rate.
You could get the calculation of your interest rate in your savings account online. They have calculators online that can help you find your interest rate.
Yes you can find in the internet, that many website will give you interest rate calculator for make calculation for you finance its like amazon and www.ybonline.co.uk
If the monthly interest rate is 0.6%, you can multiply that by 12 to get an approximation of the yearly rate. For an exact calculation (involving compound interest), you basically convert the interest rate (0.6% a month) to a factor - that is, your total money increases by a factor of 1.006 (i.e., 1 + 6%) a month. You can raise this to the power 12 to convert it to yearly, then subtract one to convert it back to an interest rate. For small interest rates, as in this case, the result should be fairly close to the above quick estimate.
Lets say you are going to deposit $1000 in your bank for one year. a. Savings account - 1% rate of interest - Interest earned = $10 b. Certificate of Deposit - 4% rate of interest - Interest earned = $40 checking account has little or 0% interest so I havent used it here.
This really depends on your interest rate and how often your interest rate is calculated. Let's assume you have a 4% interest rate, compounded, that is calculated once per month. That equals just under $110 per day! A higher/lower interest rate can change things drastically and how often your interest is calculated can as well. If your interest is calculated annually, you won't really make much. If your interest rate is .2%, the effect is the same. A 4% rate is common enough and monthly calculation on compound interest is also pretty normal. If you had 1 million dollars to put into a savings account however, you'd probably already know these money facts! Enjoy!
You could get the calculation of your interest rate in your savings account online. They have calculators online that can help you find your interest rate.
There is simple interest and there is compound interest but this question is the first that I have heard of a simple compound interest.
Yes you can find in the internet, that many website will give you interest rate calculator for make calculation for you finance its like amazon and www.ybonline.co.uk
There is no single answer to that. It will depend on the calculation you are trying to do. You could use whatever rate is appropriate. The function can use any rate, so that will be based on the particular situation you are working on and what interest rate is specified.
Require Rate of Return is formulated as: Riskfree Rate + Beta(Risk Premium) Required Rate of Return = 4.25 + 1.4 (5.50) = 11.95%
There are a huge list of sites that gives you information about home loan that only requires pay rate calculation, for example Home Loan Home, and others.
If the monthly interest rate is 0.6%, you can multiply that by 12 to get an approximation of the yearly rate. For an exact calculation (involving compound interest), you basically convert the interest rate (0.6% a month) to a factor - that is, your total money increases by a factor of 1.006 (i.e., 1 + 6%) a month. You can raise this to the power 12 to convert it to yearly, then subtract one to convert it back to an interest rate. For small interest rates, as in this case, the result should be fairly close to the above quick estimate.
begin enter Principal amount(Input) enter interest rate(Input) calculate simple interest(Computation/Processing) Display/Show/Print Give sound Simple Interest(output) end By Tomas Naxweka(Namibia)
Lets say you are going to deposit $1000 in your bank for one year. a. Savings account - 1% rate of interest - Interest earned = $10 b. Certificate of Deposit - 4% rate of interest - Interest earned = $40 checking account has little or 0% interest so I havent used it here.
This really depends on your interest rate and how often your interest rate is calculated. Let's assume you have a 4% interest rate, compounded, that is calculated once per month. That equals just under $110 per day! A higher/lower interest rate can change things drastically and how often your interest is calculated can as well. If your interest is calculated annually, you won't really make much. If your interest rate is .2%, the effect is the same. A 4% rate is common enough and monthly calculation on compound interest is also pretty normal. If you had 1 million dollars to put into a savings account however, you'd probably already know these money facts! Enjoy!
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.
It can mean many things depending on the context. With respect to mortgage interest, your effective (net) interest rate will be nominal rate (quoted rate) less tax savings you can achieve when itemizing deductions on your 1040. net interest rate = nominal rate - (nominal rate * your income marginal tax rate) or net interest rate = nominal rate * (100% - your marginal income tax rate) It will be analogical calculation with respect to corporate bonds or treasury bonds, since interest on them is taxable on federal level. But here you will be worse off, not better off, since you will be making less due to taxes. For municipal bonds, which are exempt from federal income taxes - your nominal coupon interest will be equal to your net coupon interest when analyzing federal tax implications. I am pretty sure the term Net Interest can be used in many more situations.