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The nominal interest rate, also known as an annual percentage rate or APR, is the periodic interest rate multiplied by the number of periods per year. For example, a nominal annual interest rate of 12% based on monthly compounding means a 1% interest rate per month (compounded). [2]
An unresolved root, especially one using the radical symbol, is sometimes referred to as a surd [2] or a radical. [3] Any expression containing a radical, whether it is a square root, a cube root, or a higher root, is called a radical expression , and if it contains no transcendental functions or transcendental numbers it is called an algebraic ...
In number theory, the radical of a positive integer n is defined as the product of the distinct prime numbers dividing n. Each prime factor of n occurs exactly once as a factor of this product: r a d ( n ) = ∏ p ∣ n p prime p {\displaystyle \displaystyle \mathrm {rad} (n)=\prod _{\scriptstyle p\mid n \atop p{\text{ prime}}}p}
The annual interest rate is the rate over a period of one year. Other interest rates apply over different periods, such as a month or a day, but they are usually annualized. The interest rate has been characterized as "an index of the preference . . . for a dollar of present [income] over a dollar of future income". [1]
Actuarial notation is a shorthand method to allow actuaries to record mathematical formulas that deal with interest rates and life tables.. Traditional notation uses a halo system, where symbols are placed as superscript or subscript before or after the main letter.
If there is a negative real interest rate, it means that the inflation rate is greater than the nominal interest rate. If the Federal funds rate is 2% and the inflation rate is 10% , then the borrower would gain 7.27% of every dollar borrowed per year.
In mathematics, a rate is the quotient of two quantities, often represented as a fraction. [1] If the divisor (or fraction denominator) in the rate is equal to one expressed as a single unit, and if it is assumed that this quantity can be changed systematically (i.e., is an independent variable), then the dividend (the fraction numerator) of the rate expresses the corresponding rate of change ...
As the number of compounding periods tends to infinity in continuous compounding, the continuous compound interest rate is referred to as the force of interest . For any continuously differentiable accumulation function a(t), the force of interest, or more generally the logarithmic or continuously compounded return , is a function of time as ...