## Summary

**Good job! **

You have completed the second section of the course and learned about interest rates.

Let's sum up some of the key points.

- If you know the periodic interest rate (Im), you can find the nominal rate if you multiply it by the number of compounding periods:
**Jm = Im x m** - If you know the nominal rate (Jm), you can find the periodic rate if you divide it by the number of compounding periods:
**Im****= Jm / m** - If the question is asking you
**which rate an investor would prefer**, you need to first convert all the options to effective rate (j1), and then pick the highest one (because the investor wants to BE RICH)! - If the question is asking
**which mortgage rate a borrower would prefer**, you do the same and pick the lowest one (the borrower wants to SAVE MONEY)! - The more frequent the compounding, the higher the effective rate. For example j12=6% is higher than j2=6% (we know this because they are both 6%, if the % are different you need to convert rates to j1 to compare them).
- If you are given different rates with different compounding (for example j2 = 5% and j12 = 4.5%), the only way to see which one is lower (or higher) is to convert them both to j1 using the NPEPN.