The effective annual interest rate is the actual return on a savings account or other interest-bearing investment when the effects of compounding are considered. It also reflects the real ...

Here's the formula: Real interest rate = nominal interest rate - rate of inflation (actual or expected) Here is an example from an investor's point of view. Say the initial interest rate on a bond ...

The simple interest formula The formula for simple ... it is known as a coupon payment. For example, a $1,000 bond with a 6% coupon (interest rate) pays $60 per year, or $30 semiannually.