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effective interest rate
(redirected from Effective Interest)

   Also found in: Wikipedia 0.01 sec.
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 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 actual interest rate of a loan,regardless of the face interest rate or the rate quoted.See annual percentage rate.



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34 for 80 percent loan-to-value ratio loans, meaning the effective interest rate decreased week-over-week.
FY09 results highlights: Bull points - Cherkizovo was able to keep its effective interest rate unchanged in 2009 at 4%.
The CBJ issued licensing criteria and regulation of acquisition of effective interest in Jordanian banks capital which specify "Fit and proper" standards for both board of directors and management.
 
 
 
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