Answer by Dimitri Vulis for When computing monthly interest, why do we divide...
The market convention just a tradition, and depends on the country. In the U.S. and most other countries, if a bond or a loan paying 6% a year with semi-annual frequency means each coupon is exactly...
View ArticleAnswer by D Stanley for When computing monthly interest, why do we divide...
Interest on loans, bonds, and other financial instruments is typically quoted as an annualized, uncompounded figure. So a loan with a quoted rate of 8% that is charged monthly will have a monthly rate...
View ArticleAnswer by Amaan M for When computing monthly interest, why do we divide...
In the United States, this is the difference between APR and APY. APR is typically the annual percentage rate without taking compounding into effect, so in your example, 8%. If the loan quotes you an...
View ArticleWhen computing monthly interest, why do we divide yearly interest by 12,...
I've been reading about loans and interest rates, and I've run across a mathematical sticking point. The crux is that, if my loan's outstanding balance is £100,000, I make no payments, and it has an...
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