What is a periodic interest rate?
Understand the Problem
The question is asking for the definition or explanation of a periodic interest rate, which is an important concept in finance related to how interest is calculated over specific periods.
Answer
The periodic interest rate is the rate charged for each specific period, like monthly or quarterly.
The periodic interest rate is the interest rate charged or earned for each specific period, such as monthly or quarterly.
Answer for screen readers
The periodic interest rate is the interest rate charged or earned for each specific period, such as monthly or quarterly.
More Information
The periodic interest rate helps in calculating how much interest accrues when interest compounds on a loan or investment more than once per year.
Tips
A common mistake is confusing the annual percentage rate (APR) with the periodic rate. Remember, the periodic rate is the APR divided by the number of periods per year.
Sources
- Periodic Interest Rate: Definition, How It Works, and Example - investopedia.com
- Periodic Rate Definition | Mesh Financial Glossary - meshpayments.com
- What Is a Periodic Interest Rate? - Quicken - quicken.com
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