15-6-2

Interest Conversion

kExample 2

What is the nominal interest rate ([APR]) on a certificate that offers an annual effective interest rate ([EFF]) of 5%, compounded bi-monthly (N = 6)?

Tip

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Calculation Formulas

n

EFF = 1+ APR/100 –1 100 n

1

APR = 1+ EFF100n –1 n 100

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