Annual Equivalent Rate - AER
In the United Kingdom, the amount of interest received from savings accounts is listed in AER form.
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.
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