# Formula required: A.E.R. <> C.A.R.



## brendan76 (13 Jan 2008)

Is there a formula to convert an A.E.R. ([SIZE=-1]Annual Equivalent Rate[/SIZE]) to a C.A.R. ([SIZE=-1]Compound Annual Rate[/SIZE]). In comparing interest rates by 2 banks; one uses C.A.R. and the other uses A.E.R. but which of the two banks offer the best rate.


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## ClubMan (13 Jan 2008)

Aren't they the same thing and directly comparable? Dittor for _EAR_?


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## messyleo (14 Jan 2008)

That's what i though clubman, but wasn't positive (i thought it might be  a trick question!)


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## Askook25 (9 Dec 2009)

can anybody tell the formula....

__________________
Compound Interest Formula


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## PMU (9 Dec 2009)

The definitions are available on the Financial Regulator’s web site: http://www.itsyourmoney.ie

  A.E.R. is forward looking and tells what the rate of interest would be if the nominal rate were compounded annually; C.A.R. is backward looking and is measure of your rate of return.


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