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# Notation

The following general notation is used throughout these formulas, unless something different is specifically mentioned:

 D = discount rate FV = future value, or future cashflow i = interest rate or yield per annum n = number of times per year an interest payment is made N = number of years or number of coupon periods P = price (dirty price for a bond) PV = present value, or cashflow now r = continuously compounded interest rate R = coupon rate paid on a security year = number of days in the conventional year zk = zero-coupon yield for k years

# Financial arithmetic basics (Chapter 1)

## Effective and nominal rates

If the interest rate with n payments per year is i, the effective rate (equivalent annual rate) i* is:

Similarly:

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