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INTEREST RATE (%) by Mind Map: INTEREST RATE (%)

1. Money price in time

1.1. Variable affecting you

1.1.1. Inflation

1.1.2. Devaluation

1.1.3. Offer and Demand

1.1.4. Business Risk

2. Effective Rate (E)

2.1. Annually effective rate (EA)

2.1.1. Expired (iPv)

2.1.2. EA=(1+iPv)^n

2.1.2.1. iPv=(1+EA)^(1/n)-1

2.1.2.2. iPv=iN/n

2.2. Periodic effective rate

2.2.1. Expired (iPV)

2.2.2. Advenced (iPA)

2.2.3. Periods

2.2.3.1. Monthly iPM

2.2.3.2. Bimonthly iPB

2.2.3.3. Quarterly iPT

2.2.3.4. Biannualy iPS

2.2.3.5. Diary iPD

2.2.4. Relationship

2.2.4.1. They don't split, it doesn't multiply by the number of periods.

3. Nominal Rate (N)

3.1. Expressed annually

3.2. Interest clearance period

3.3. Expired or Advanced

3.4. Relationship between nominal rate and periodic rate

3.4.1. N=Annual rate/Periods

3.4.2. iP= (Periods Stipulated in the Nominal Rate)* (Periodid Rate)

3.5. Difference between nominal and effective rate

3.5.1. The nominal rate is the profitability generated period by period (simple interest)

3.5.2. The effective rate is the profitability obtained both on the investment and on the interests of each period (compound interest)

4. Periodic Rate

4.1. Applies for a specific period of less than one year

4.2. It can be obtained from the nominal interest rate and from the effective annual rate.