nominal_rate

Evaluates the nominal annual interest rate.

Synopsis

#include <imsl.h>

float imsl_f_nominal_rate (float effective_rate, int n_periods)

The type double function is imsl_d_nominal_rate.

Required Arguments

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

int n_periods (Input)
Number of compounding periods per year.

Return Value

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

Description

Function imsl_f_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, imsl_f_nominal_rate computes the nominal annual interest rate of the effective interest rate, 6.14%, compounded quarterly.

 

#include <stdio.h>

#include <imsl.h>

 

int main()

{

double effective_rate = .0614;

int n_periods = 4;

double nominal_rate;

 

nominal_rate = imsl_d_nominal_rate (effective_rate, n_periods);

printf ("The nominal rate of the effective rate, 6.14%%, \n");

printf ("compounded quarterly is %.2f%%.\n", nominal_rate * 100.);

}

Output

 

The nominal rate of the effective rate, 6.14%,

compounded quarterly is 6.00%.