qfinbox.tvm.basic.effective_rate

qfinbox.tvm.basic.effective_rate(nominal_rate: float, compounding_frequency: int) → float

Calculate effective annual rate from nominal rate.

Parameters:

• nominal_rate (float) – Nominal annual interest rate (as decimal).

• compounding_frequency (int) – Number of compounding periods per year.

Returns:

Effective annual rate.

Return type:

float

Examples

>>> effective_rate(0.12, 12)  # 12% compounded monthly
0.1268