NOMRATE Function

Returns the nominal annual interest rate.

Category:

Financial

Syntax

NOMRATE(compounding-interval, rate)

Required Arguments

compounding-interval

is a SAS interval. This value represents how often the returned value is compounded.

rate

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

Details

The NOMRATE function returns the nominal annual interest rate. NOMRATE computes the nominal annual interest rate that corresponds to an effective annual interest rate.

The following details apply to the NOMRATE function:

The values for rates must be at least –99.
In considering an effective interest rate and a compounding interval, if compounding-interval is 'CONTINUOUS', then the value that is returned by NOMRATE equals log_e(1+[rate/100]).

If compounding-interval is not 'CONTINUOUS', and m intervals occur in a year, the value that is returned by NOMRATE equals the following:

$m ({(1 + \frac{r a t e}{100})}^{\frac{1}{m}} - 1)$
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 an effective rate is 10% when compounded monthly, the corresponding nominal rate can be expressed as follows:
```
effective_rate1 = NOMRATE('MONTH', 10);
```
If an effective rate is 10% when compounded quarterly, the corresponding nominal rate can be expressed as follows:
```
effective_rate2 = NOMRATE('QUARTER', 10);
```