Stated Annual Interest Rate
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Definition of 'Stated Annual Interest Rate'
The return on an investment that is expressed as a per-year percentage, and that does not account for compounding that occurs throughout the year. The effective annual interest rate, on the other hand, does account for intra-year compounding that can occur on a daily, monthly or quarterly basis. Typically, the effective annual interest rate will lead to higher returns than the stated annual interest rate due to the power of compounding. Investors can compare products and calculate which type of interest will offer the most favorable return.
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Investopedia explains 'Stated Annual Interest Rate'
A $10,000, one-year certificate of deposit with a stated annual interest rate of 10% will earn $1,000 at maturity. If the money was placed in an interest-earning savings account that paid 10% compounded monthly, the account will earn interest at a rate of 0.833% each month (10% divided by 12 months; 10/12 = 0.833). Over the course of the year, this account will earn $1,047.13 in interest, at an effective annual interest rate of 10.47%, which is notably higher than the returns on the 10% stated annual interest rate of the certificate of deposit used in the example.
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Search results for 'Stated Annual Interest Rate'
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http://www.investopedia.com/ask/answers/04/031804.asp
... example. Suppose the stated annual interest rate on a savings account is 10%, and say you put $1,000 into this savings account. After ...
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http://www.investopedia.com/articles/pf/10/credit-card-correspondence.asp
... index changes. Let's say your current interest rate of 11.4% Annual Percentage Rate - APR is stated as 7.9% + the Prime Rate. Taking ...
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http://www.investopedia.com/exam-guide/series-65/cash-equivalents-fixed/bond-yields.asp
... YTM will be greater than its stated interest rate (also known ... to maturity will equal the stated coupon rate. ... Current Yield: Simply, the annual income divided by ...
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http://www.investopedia.com/exam-guide/cfa-level-1/quantitative-methods/time-value-money-calculations.asp
... Free Annual Reports. More Features ». ... 5.8 Purchasing Power Parity and Interest Rate Parity; 5.9 Foreign Exchange; 5.10 Spread Calculations; ...
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http://www.investopedia.com/articles/optioninvestor/08/manage-interest-rate-risk.asp
... A caplet is designed to provide a hedge against a rise in the benchmark interest rate, such as the London Interbank Offered Rate (LIBOR), for a stated period. ...
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http://www.investopedia.com/professionals/questionoftheweek/cfa/010406.asp
... What would the minimum APR (or stated annual interest rate) have to be on a mortgage backed security so that you would rather hold the MBS as opposed to the ...
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http://www.investopedia.com/articles/bonds/09/bear-on-bonds.asp
... the T-bill receives the full amount stated on the ... are from five to 30 years and interest is paid ... discount from face value and pay no annual interest because it ...
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http://www.investopedia.com/articles/basics/10/are-equity-index-annuities-right-for-you.asp
... Christopher Cox, Chairman of the Securities and Exchange Commission stated at the time ... found, is typically 90% of the premium paid at a 3% annual interest rate. ...
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http://www.investopedia.com/exam-guide/cfa-level-1/fixed-income-investments/typical-yield-measures.asp
... Free Annual Reports. More Features ». ... 5.8 Purchasing Power Parity and Interest Rate Parity; 5.9 Foreign Exchange; 5.10 Spread Calculations; ...
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http://www.investopedia.com/ask/answers/05/022505.asp
... payable is stated as a percentage of the amount borrowed, known as the par value of the bond. Thus, a bond with a par value of $1,000 and an interest rate of 10 ...
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