NOMINAL_RATE Function

Evaluates the nominal annual interest rate.

Usage

result = NOMINAL_RATE (effective_rate, n_periods)

Input Parameters

effective_rate—The amount of interest that would be charged if the interest was paid in a single lump sum at the end of the loan.

n_periods—Number of compounding periods per year.

Returned Value

result—The nominal annual interest rate. If no result can be computed, NaN is returned.

Input Keywords

Double—If present and nonzero, double precision is used.

Discussion

Function NOMINAL_RATE computes the nominal annual interest rate. The nominal interest rate is the interest rate as stated on the face of a security. It is computed using the following:

 

Example

In this example, NOMINAL_RATE computes the nominal annual interest rate of the effective interest rate, 6.14%, compounded quarterly.

PRINT, NOMINAL_RATE(0.0614, 4)

; PV-WAVE prints: 0.0600348