Interest Rate Converter continuous variable.xlsx

	B	C	D	E	F	G	H	I	J	K	L	N
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2	Interest Rate Converter - all rates are quoted annual rates but the number of times compounded per year (compounding frequency) differs
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7		Nominal	Continuous compounding	Compounding every xx seconds	Daily compounding NACD	Monthly compounding NACM	Quarterly compounding NACQ	Semi Annual compoundin NACS	Annual compounding NACA	3-Yearly compounding NAC3	Compounding Frequency per year
8			(Compounded every nano-second)	60	(Compounded Daily)	(Compounded Monthly)	(Compounded Quarterly)	(Compounded semi-annually)	(Compounded Annually)	(Compounded only every 3 years)
9	NACD	12.00%	11.99800%	11.99800%	12.000000%	12.06%	12.18%	12.37%	12.75%	14.44%	360*
10	NACM	12.00%	11.94040%	11.94040%	11.942377%	12.00%	12.12%	12.30%	12.68%	14.36%	12
11	NACQ	12.00%	11.82352%	11.82352%	11.825463%	11.88%	12.00%	12.18%	12.55%	14.19%	4
12	NACS	12.00%	11.65378%	11.65378%	11.655668%	11.71%	11.83%	12.00%	12.36%	13.95%	2
13	NACA	700.00%	207.94415%	207.94457%	208.545878%	227.05%	272.72%	365.69%	700.00%	17033.33%	1
14	NAC3	13.50%	11.33458%	11.33458%	11.336361%	11.39%	11.50%	11.66%	12.00%	13.50%	Compounded only every 3 years
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16		=	input cells
17		=	output cells
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19	In comparing interest rates between e.g. a bond which only pays annual coupons and a bond which pays monthly coupons, both bonds must be converted to the same NACM or NACA rates.
20	(A bond that pays 1% every month compounds to a higher interest rate than a bond that pays 12 % annually).
21	(A consistent compounding basis is also important in comparing e.g. TQQQ $ daily returns to TQQQ 3-year returns.)
22	Daily $ TQQQ returns (nacd) in are not comparable to ((TQQQ annual returns) / 365) (naca)) unless both returns are expressed on the same compounding basis. E.g. both returns are converted to NACA.
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24	Interest rates may be quoted in a number of ways. These common ways may include:
25	- NACM or Nominal Annual Compounded Monthly Rates
26	- NACQ or Nominal Annual Compounded Quarterly
27	- NACS or Semi-Annual Interest Rates
28	- NACA or Annual Effective Rates
29	Comparing rates requires that rates are quoted on an identical basis.
30	This tool will permit the user to convert Continuous compoundnig to NACD, NACM, NACQ, NACS, NACA, and NAC3 interest rates.
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32	* This model follows the "Actual / 360" ISDA interest rate day count convention. Other conventions include 365 days, 253 trading days etc
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34	As an example assume TQQQ grew 7 times in the last year. Insert 700% in cell C13 (the annual rate). The daily growth rate was not 700%/360days = 1.94% per day. The correct daily growth rate calculation is =(((1+700%)^(1/360)-1 = 0,58% per day (much less than 1.94% pd) = 208,5%nacd [0,58%*360days]
35		A daily rate of 0,58%pd = 208,5%nacd yields exactly the same USD return as an annual rate of 700%naca. Lower interest rates are much easier to conceptualise than TQQQ's extreme growth rates and extreme compounding effects. Normal scale TQQQ price charts soon become meaningless over longer periods..
36	Further explanations here:											0.58%
37	https://www.youtube.com/watch?v=dzMvqJMLy9c											2.085458784
38	https://www.investopedia.com/articles/07/continuously_compound.asp
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