# effective interest rate

(redirected from Aer)
Also found in: Medical, Acronyms, Wikipedia.

## Effective Interest Rate

The annual rate at which an investment grows in value when interest is credited more often than once a year.

## Effective Interest Rate

The interest rate on a debt or debt security that takes into account the effects of compounding. For example, if one has a fixed-income investment such as certificate of deposit that pays 3% in interest each month, the effective interest rate is more than 3% because compounding the interest results in a (slightly) greater principal each month on which the interest rate is calculated. In this example, the effective interest rate is calculated thus:

Effective interest rate = (1 + .03/12)^12 - 1 = .0304 = 3.04%, where .03 is the simple interest rate and 12 is the number of times in a year interest is compounded. It is also known as the annual effective rate or the annual equivalent rate. See also: Stated annual interest rate, annual percentage yield.

## effective interest rate

the INTEREST RATE payable on the purchase price of a BOND. For example, a bond with a face value of £100 and a NOMINAL (COUPON) INTEREST RATE of 5% generates a nominal return of £5 per year. If, however, the bond can be purchased for £50 on the open market, then the effective interest rate now rises to 10%, representing a 10% return on the £50 invested. The lower the purchase price of a bond with a given nominal rate of interest, the higher its effective rate of interest will be, and vice-versa. There is thus an inverse relationship between the price paid for a bond and its effective rate of interest (sometimes called the interest YIELD).

## effective interest rate

The actual interest rate of a loan,regardless of the face interest rate or the rate quoted.See annual percentage rate.

References in classic literature ?
5) Aether is the bright, untainted upper atmosphere, as distinguished from Aer, the lower atmosphere of the earth.
4billion offer from International Airlines Group, owners of British Airways, to buy Aer Lingus "maximises Ryanair shareholder value".
His promotion was announced as the International Airlines Group presses on with drumming support up for its PS1bn bid for Aer Lingus.
Aer Lingus announced in a statement that its board was "willing to recommend" IAG's improved proposal -- its third since December -- subject to certain conditions.
Last week Coalspur formally requested that the AER cancel the hearing scheduled to be held today, January 13, 2014, in light of the fact that the Company had reached agreement with all parties who were granted full intervener status.
About AER Logistics - AER Logistics is a division of AER Technologies, Inc.
The route, operated by Aer Arann, will operate two daily return flights to Newcastle from Dublin Airport beginning October 24.
8% shareholding in Aer Lingus was likely to "weaken its main competitor" and could hold it back from remaining competitive by threatening to block any merger or acquisition deals with other airlines.
Until now, the fundamental gap in all radar interpretations of hail has been ground truth," said Nicole Homeier, senior staff scientist at AER.
Officials said the merger may have created a stranglehold for Ryanair on nearly 50 routes where they compete with Aer Lingus.
As part of the new relationship, Aer Lingus will provide Ulster Rugby with air travel as well as supporting the development of travel and accommodation packages for Ulster supporters to away matches.
Ryanair has asked six other airlines to fly alternative routes connected to Dublin, a market that it dominates along with Aer Lingus, to assure regulators that the market will remain competitive, the Financial Times (http://www.

Site: Follow: Share:
Open / Close