Chapter 5: Interest Rates - Baylor University

Chapter 5: Interest Rates . Fundamental questions: 1) How do we handle non-annual cash flows and interest rates? 2) What factors affect the interest rate on a security? 5.1 Interest Rate Quotes and Adjustments A. The Effective Annual Rate Effective interest rate: actual interest rate for period Ex. 1) Assume effective interest rate for year is 9%. ................
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