lifecontingencies (version 0.9.2)

nominal2Real: Function to convert nominal interest rate to effective interest rate.

Description

This function evaluates the real (also known as effective) interest (or discount) rate given the nominal interest (or discount) rate compounded m-times.

Usage

nominal2Real(i, k = 1, type="interest")

Arguments

i

Nominal interest rate.

k

Frequency of compounding

type

Either "interest" or "discount" rate

Value

• A numeric value is returned.

References

Broverman, S.A., Mathematics of Investment and Credit (Fourth Edition), 2008, ACTEX Publications.

See Also

real2Nominal

Examples

#a nominal rate of 0.12 equates an APR of
nominal2Real(i=0.12, k = 12, "interest")