You are here

Interest rate notations

29 April, 2015 - 15:03

What is commonly referred to as the interest rate in the media is generally the rate offered on overnight deposits by the Central Bank or other authority, annualised.

The total interest on an investment depends on the timescale the interest is calculated on, because interest paid may be compound interest|compounded.

In finance, the effective interest rate is often derived from the yield, a composite measure which takes into account all payments of interest and capital from the investment.

In retail finance, the annual percentage rate and effective annual rate concepts have been introduced to help consumers easily compare different products with different payment structures.

Money market mutual funds quote their rate of interest as the 7 Day SEC Yield.