"NOMINAL and EFFECTIVE RATES of INTEREST. The nominal annual rate % of compounding is ANNRATE%, the compounding period in months is CMPERIOD. = 1/30 for daily, = 1 for monthly, =3 for quarterly, =12 for yearly. FREQCONV is the number of compoundings in one year. NPERIODS is number of compounding periods in one year and equals FREQCONV. RATE%PER is the nominal rate % per compounding period. EFFRATE% is effective annual interest rate. *** Answers to problems *** (c) PCSCC, Inc., 1993 (a) Set ANNRATE%=3, CMPERIOD=1 (for a period of 1 month). EFFRATE%=3.042. (b) First, Set CMPERIOD=3 (period is quarterly). Move cursor to ANNRATE%. Type !S (note: type ! first then type S). For varname,type (esc) EFFRATE% (ent),For value, type (esc) 5 (ent). ANNRATE%=4.909. Note: this is an example of backsolving an equation for the value of an independent variable. Type any key to exit. ||(a) Find the effective rate EFFRATE% equivalent to a nominal rate of 3% compounded monthly. (b) Find the nominal rate ANNRATE% which when compounded quarterly is equivalent to an effective rate of 5%. Type , to see answers. Type (F2) to return to helpfile."
