nominalRate¶
Evaluates the nominal annual interest rate.
Synopsis¶
nominalRate (effectiveRate, nPeriods)
Required Arguments¶
- float
effectiveRate(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
nPeriods(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 nominalRate 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:
\[\left[(1 + \mathit{effectiveRate})^{\frac{1}{\mathit{nPeriods}}} - 1\right] *
\mathit{nPeriods}\]
Example¶
In this example, nominalRate computes the nominal annual interest rate
of the effective interest rate, 6.14%, compounded quarterly.
from __future__ import print_function
from numpy import *
from pyimsl.math.nominalRate import nominalRate
effective_rate = .0614
n_periods = 4
nominal_rate = nominalRate(effective_rate, n_periods)
print("The nominal rate of the effective rate, 6.14%,")
print("compounded quarterly is %.2f%%." % (nominal_rate * 100.))
Output¶
The nominal rate of the effective rate, 6.14%,
compounded quarterly is 6.00%.