Comment Comment by kgwgk > (beware though, Wikipedia is bound to lead to errors by defining the monthly rate as yearly rate / 12)Lead to errors relative to what? The mathematical idealisation or the actual practice?Are you referring to this page?https://en.wikipedia.org/wiki/Mortgage_calculator"Since the quoted yearly percentage rate is not a compounded rate, the monthly percentage rate is simply the yearly percentage rate divided by 12."Do you think that the explanation above is wrong?In practice interest payments are calculated in many "wrong" ways, but that's what it is:https://en.wikipedia.org/wiki/Day_count_convention parent kgwgk 2 years ago
Lead to errors relative to what? The mathematical idealisation or the actual practice?
Are you referring to this page?
https://en.wikipedia.org/wiki/Mortgage_calculator
"Since the quoted yearly percentage rate is not a compounded rate, the monthly percentage rate is simply the yearly percentage rate divided by 12."
Do you think that the explanation above is wrong?
In practice interest payments are calculated in many "wrong" ways, but that's what it is:
https://en.wikipedia.org/wiki/Day_count_convention