Read the formula and variables
The quotation is nominal annual rₛ with m equal compounding periods per year.
| Input | Meaning |
|---|---|
| rₛ | Nominal annual rate as a decimal |
| m | Compounding periods per year |
| EAR | One-year effective rate |
Check a stated example
A 6% nominal rate with quarterly compounding has EAR 6.1363550625%.
The amounts in the example are synthetic. Keep the original precision through the calculation and round only the displayed result.
Check the domain and timing
Dividing rₛ by m uses the stated nominal convention. Do not apply that division rule to an effective annual rate without conversion.
A changed date, payment pattern or quotation convention can require a different expression even when the numbers look similar. Identify those features before calculating.