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What is difference between interest rate stated as per annum and just interest rate as a percentage?
Wiki User
∙ 15y ago
Answer Best explained this way:
1) a friend asks for a loan of $1,000 for a couple of months. You say, OK but I want 10% Interest when you pay me back! When you friend pays you back the $1,000 he or she has to add 10% of the initial loan which equals $1,100.00.
2) You go to the bank and want to open an account paying 5.45% per annum on a 6 month CD (Certificate of Deposit) You give the bank 10,000. When you cash in your CD in 6 months, you'll have earned -
1/2 of $545 or $272.50 -- how did that happen?
The bank is only paying 5.45% per YEAR - you only loaned the bank 10,000 for 1/2 year.
The Math:
5.45 divided by 12 months equals: 0.454 x 6 Months Equals 2.7249996 x 10,000 - 272.50 rounded off. Hope this helps Answer An interest rate as a percentage is the one flat rate you must pay. Interest rate per annum is a compound interest, determined every year that the loan (or whatever) has not been paid back. Say, if you owed me $100 with a 1% per annum interest rate. You have to pay me back $101. If you have not repaid the loan, the next year you would have to pay me an extra 1% of $101, and so on.
Wiki User
∙ 15y ago
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A borrower is often confrented with a stated interest rate and an effective interest rate What is the difference and which one should a financial manager recognize as the true cost of borrowing?
A stated interest rate is the rate that is available when you are applying. An effective interest rate is the rate that has been applied to the loan. The true cost of borrowing is the effective interest rate.
What is differnce between interest rate stated as per annum and just interest rate as a percentage?
An interest rate as a percentage is the one flat rate you must pay. Interest rate per annum is a compound interest, determined every year that the loan (or whatever) has not been paid back. Say, if you owed me $100 with a 1% per annum interest rate. You have to pay me back $101. If you have not repaid the loan, the next year you would have to pay me an extra 1% of $101, and so on.
Who determines the rate of interest paid on a bond?
Bonds have a predetermined rate of interest called the stated or contract rate, which is established by the board of directors.
What occurs when a bond's stated interest rate is greater than the market interest rate?
The bond's price will be in premium, meaning exceed 100
What is the difference between cetificate Deposits and Time Deposits?
They both refer to the exact same thing. It is just two different terms by which we are referring to this deposit product. In this, a customer deposits a lump-sum amount with the bank for a fixed amount of time at a fixed rate of interest. In return, the bank gives a certificate to the customer which he/she can surrender after the stated time in return for the invested amount + interest. They are called Time Deposits, Certificate of Deposit, Fixed Deposits etc.
What is the Difference between nominal and effective interest rate?
Nominal interest rate is also defined as a stated interest rate. This interest works according to the simple interest and does not take into account the compounding periods. Effective interest rate is the one which caters the compounding periods during a payment plan. It is used to compare the annual interest between loans with different compounding periods like week, month, year etc. In general stated or nominal interest rate is less than the effective one. And the later depicts the true picture of financial payments.
Is there a difference percent error and percentage error?
The difference: -age(hey, it's not wrong...)In general, probably not - percent and percentage are often used interchangeably. The context of use may warrant a difference though, if strict semantics are being followed:"Percent error" would refer to the the maximum potential difference between what a value could be, and what that value is stated to be. "Percentage error", in such a scenario, would refer to an erroneous percentage (as in, the percentage itself is incorrect).
What is the Difference between stated and APY rates?
In short, stated rate does not include interest income made by (usually) monthly compounding of interest income. This means that if you multiply your initial investment by APY, you will get exactly the amount you will have after one year, provided you did not add or withdraw any funds. If you multiply your initial investment by Stated Rate you will get amount lower that what you would be able to withdraw after twelve months.
What is the difference between stated and implied text?
A stated main idea is clearly stated but an implied main idea is left for you to interpret.
With a tenants in common ownership do you need to put the percentage each person will own on the deed?
You don't need to recite a percentage of ownership unless you want to create a co-ownership that is not equal. If no percentage is recited the parties automatically acquire a 50% interest. If you want a different division it must be clearly stated on the deed.You don't need to recite a percentage of ownership unless you want to create a co-ownership that is not equal. If no percentage is recited the parties automatically acquire a 50% interest. If you want a different division it must be clearly stated on the deed.You don't need to recite a percentage of ownership unless you want to create a co-ownership that is not equal. If no percentage is recited the parties automatically acquire a 50% interest. If you want a different division it must be clearly stated on the deed.You don't need to recite a percentage of ownership unless you want to create a co-ownership that is not equal. If no percentage is recited the parties automatically acquire a 50% interest. If you want a different division it must be clearly stated on the deed.
A borrower is often confrented with a stated interest rate and an effective interest rate What is the difference and which one should a financial manager recognize as the true cost of borrowing?
A stated interest rate is the rate that is available when you are applying. An effective interest rate is the rate that has been applied to the loan. The true cost of borrowing is the effective interest rate.
What is differnce between interest rate stated as per annum and just interest rate as a percentage?
An interest rate as a percentage is the one flat rate you must pay. Interest rate per annum is a compound interest, determined every year that the loan (or whatever) has not been paid back. Say, if you owed me $100 with a 1% per annum interest rate. You have to pay me back $101. If you have not repaid the loan, the next year you would have to pay me an extra 1% of $101, and so on.
What is the difference between explicit and implicit?
explicit is clearly stated and implicit is not clearly stated
What is the main difference between these two categories?
You haven't stated any categories.
What is the difference between the implied main idea and a stated main idea?
The difference is that the stated main idea is there in the text but the implied main idea is what you think the author was trying to convey.
What is the difference between a stated main idea and an implied main idea?
The difference is that the stated main idea is there in the text but the implied main idea is what you think the author was trying to convey.
How is interest cost stated?
Businesses typically state interest cost as a percentage of the amount borrowed per unit of time. Examples are 12 percent per year and 1 percent per month.
