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John Moffat.
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lavenite
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If we are calculating the effective interest rate, does the net payment (the numerator in the calculation which includes actual interest payment and premium) also include the gain/loss made on exercising the option?
Thank you!
John Moffat
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The effective interest rate gives the effective interest if the option is exercised I.e the maximum interest rate or minimum interest rate depending on whether we are borrowing or investing.
Have you watched my free lectures on this?
lavenite
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