Annual Equivalent Rate - AER
- Annual Equivalent Rate - AER
- Interest that is calculated under the assumption that any interest paid is combined with the original balance and the next interest payment will be based on the slightly higher account balance. Overall, this means that interest can be compounded several times in a year depending on the number of times that interest payments are made.
In the United Kingdom, the amount of interest received from savings accounts is listed in AER form.
Calculated as:
Where:
n = number of times a year that interest is paid
r = gross interest rate
For example, a savings account with a quoted interest rate of 10% that pays interest quarterly would have an annual equivalent rate of 10.38%. Investors should be aware that the annual equivalent rate will typically be higher than the actual annual rate calculated without compounding.
Investment dictionary.
Academic.
2012.
Look at other dictionaries:
annual equivalent rate — ➔ rate1 * * * annual equivalent rate UK US noun [C] ► BANKING, FINANCE AER(Cf. ↑AER) … Financial and business terms
annual equivalent rate — noun An interest percentage rate calculated as if it were paid and compounded once a year (abbrev AER) • • • Main Entry: ↑annual … Useful english dictionary
Annual percentage rate — Parts of total cost and effective APR for a 12 month, 5% monthly interest, $100 loan paid off in equally sized monthly payments. The term annual percentage rate (APR), also called nominal APR, and the term effective APR, also called EAR,[1]… … Wikipedia
Annual Equivalent Rate — /ˌænjuəl ɪˌkwɪvələnt reɪt/ noun a figure which shows what the interest rate on an account would be if interest was paid for a full year and compounded. Abbreviation AER … Dictionary of banking and finance
rate — The cost of debt service paid by a borrower or issuer to a lender or investor. The rate is expressed as an annual percentage of the amount borrowed. For some notes and bonds that pay interest semiannually, the semiannual interest due to the… … Financial and business terms
AER — FINANCE annual equivalent rate; a rate of interest which shows how much interest you receive from an investment in one year if each interest payment is added to the deposit before the following year s payment is calculated : • The new bond pays a … Financial and business terms
AER — is a three letter acronym that may refer to:* Annual equivalent rate, a notational interest rate * Aer, a skyscraper in Japan * Apical ectodermal ridge (AER), critical component of vertebrate limb development * Aër, a liturgical item in the Greek … Wikipedia
AER — ist: ein Bestandteil von Fremdwörtern aus dem Griechischen und Lateinischen mit der Bedeutung „Luft“; siehe Liste griechischer Wortstämme in deutschen Fremdwörtern Aer ist davon abgeleitet Namensbestandteil verschiedener Fluggesellschaften: Aer… … Deutsch Wikipedia
Aer — ist: ein Bestandteil von Fremdwörtern aus dem Griechischen und Lateinischen mit der Bedeutung „Luft“; siehe Liste griechischer Wortstämme in deutschen Fremdwörtern Aer ist davon abgeleitet Namensbestandteil verschiedener Fluggesellschaften: Aer… … Deutsch Wikipedia
AER — The American Economic Review (Community » Media) **** Annual Equivalent Rate (Business » Accounting) *** Army Emergency Relief (Governmental » Military) * Auditory Evoked Response (Medical » Physiology) * Alternative Energy Requirement… … Abbreviations dictionary
