(12C) Annualised Equivalent Rate & Continuously Compounded Rate
06-11-2019, 03:30 PM
Post: #1
 Joe_H Junior Member Posts: 23 Joined: Jun 2019
(12C) Annualised Equivalent Rate & Continuously Compounded Rate
Often the interest rate given is the nominal rate that compounds a given number of times in the year. I want a very quick way to calculate the annualised equivalent rate (AER) which is the same rate that compounds only once a year (often this is what banks quote as regulatory authorities mandate them to as the public understand 8.3% AER versus 8% APR compounded, say, monthly during the year. Also options and some other derivatives use the continuously compounded rate CCR (the asymptotic limit going from compounding once a year to monthly, to weekly, to daily, to hourly etc.). So the program will also calculate this also. I want to avoid using other registers, if possible, so it's a bit longer than necessary (e.g. the 100's being entered below!) as I don't want it to disturb a cashflow sequence entered into the calculator. {I'm intending to attempt the CFA exams and anything that adds to speed is a good :-) Can't figure out how to post smiley's to this! :-( }

The other permitted calculator (TI BA II Plus) has a sheet to do this but the HP12C will have significantly lower keystrokes as only have to input n (number of compounding periods per year) and i (the nominal rate) and then R/S. TI doesn't calculate the CCR on that sheet.

AER is output to X and CCR to Y.

For example (rounded to 2 decimal places):
i = 8% APR compounded monthly
AER = 8.30%
CCR = 8.33%

Let me know if you spot any problems in it.

Regards,

Joe

Code:
 01 1 02 RCL [i]     03 % 04 ENTER 05 e^x 06 x<>y 07 Rv 08 - 09 CHS 10 1 11 0 12 0 13 x 14 Rv 15 Rv 16 RCL [n] 17 / 18 1 19 + 20 RCL [n] 21 y^x 22 1 23 - 24 1 25 0 26 0 27 x 28 x<>y 29 Rv
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 Messages In This Thread (12C) Annualised Equivalent Rate & Continuously Compounded Rate - Joe_H - 06-11-2019 03:30 PM RE: (12C) Annualised Equivalent Rate & Continuously Compounded Rate - Carsen - 06-11-2019, 06:32 PM RE: (12C) Annualised Equivalent Rate & Continuously Compounded Rate - Joe_H - 06-11-2019, 10:42 PM RE: (12C) Annualised Equivalent Rate & Continuously Compounded Rate - SlideRule - 06-12-2019, 03:20 PM RE: (12C) Annualised Equivalent Rate & Continuously Compounded Rate - Joe_H - 06-12-2019, 04:37 PM RE: (12C) Annualised Equivalent Rate & Continuously Compounded Rate - Joe_H - 06-13-2019, 03:22 PM

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