Desde Investopedia

TERM OF THE DAY

Periodic Interest Rate The periodic interest rate is the interest rate charged on a loan or realized on an investment over a specific period of time. Typically, lenders quote interest rates on an annual basis, but in most cases, the interest compounds more frequently than annually. As a result, the periodic interest rate is the annual interest rate divided by the number of compounding periods.

Breaking it Down: For example, the interest on a mortgage is compounded or applied on a monthly basis. If the annual interest rate on a mortgage is 8%, the periodic interest... Read More