Finance
Calculator
HP 10B
Interest Rate Conversion
The interest conversion function can be used when either the nominal interest rate is
given, and the annual effective interest rate is needed, or when the annual effective rate
is given and the nominal rate is needed.
a. A certificate offers a nominal interest rate of 5% with quarterly compounding. What
is the annual effective interest rate?
Enter Nominal rate: 5, 2nd, NOM
(first row second column above the I/YR key)
Enter quarterly compounding: 4, 2nd, P/Y
(first row fourth column above the PMT key)
Compute unknown EFF: answer is 5.09% (2nd, first row
third column above PV key)
This process can be reversed, for example, to find the Nominal rate when the Effective
rate is given.
- A certificate offers an annual effective interest rate of 6% with quarterly compounding.
What is the nominal interest rate?
Enter effective interest rate: 6, 2nd, EFF
Compounding should still be set at: 4, 2nd, P/Y
Compute unknown NOM: answer is 5.87%
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Last Updated on 1 May 2002, e-mail any comments to: robert.balik@wmich.edu |