# EFFRATE Function

Returns the effective annual interest rate.

 Category: Financial

## Syntax

### Required Arguments

#### compounding-interval

is a SAS interval. This value represents how often rate compounds.

#### rate

is numeric. rate is a nominal annual interest rate (expressed as a percentage) that is compounded at each compounding interval.

## Details

The EFFRATE function returns the effective annual interest rate. The function computes the effective annual interest rate that corresponds to a nominal annual interest rate.
The following details apply to the EFFRATE function:
• The values for rates must be at least –99.
• In considering a nominal interest rate and a compounding interval, if compounding-interval is 'CONTINUOUS', then the value that is returned by EFFRATE equals erate/100–1.
If compounding-interval is not 'CONTINUOUS', and m compounding intervals occur in a year, the value that is returned by EFFRATE equals (1+[rate/100 m])m–1.
• The following values are valid for compounding-interval:
• 'CONTINUOUS'
• 'DAY'
• 'SEMIMONTH'
• 'MONTH'
• 'QUARTER'
• 'SEMIYEAR'
• 'YEAR'
• If the interval is 'DAY', then m=365.

## Example

• If a nominal rate is 10%, then the corresponding effective rate when interest is compounded monthly can be expressed as
`effective_rate1 = EFFRATE('MONTH', 10);`
• If a nominal rate is 10%, then the corresponding effective rate when interest is compounded quarterly can be expressed as
`effective-rate2 = EFFRATE('QUARTER', 10); `