Calculate the Effective Annual Rate (EAR) and Annual Percentage Yield (APY) to understand the true cost or return of an investment.
Used to calculate real return
EAR Formulas
Discrete Compounding: EAR = (1 + r/n)^n - 1
Continuous Compounding: EAR = e^r - 1
Real Return: Real Rate = [(1 + EAR) / (1 + Inflation)] - 1
Where r = nominal rate, n = compounding periods per year, e = 2.71828...
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