# EFFECT

Returns the effective annual interest rate, given the nominal annual interest rate and the number of compounding periods per year.

## Syntax

```
EFFECT(<nominal_rate>, <npery>)
```

### Parameters

Term | Definition |
---|---|

nominal_rate | The nominal interest rate. |

npery | The number of compounding periods per year. |

## Return Value

The effective annual interest rate.

## Remarks

EFFECT is calculated as follows:

$$\text{EFFECT} = \bigg( 1 + \frac{\text{nominal_rate}}{\text{npery}} \bigg)^{\text{npery}} - 1$$

npery is rounded to the nearest integer.

An error is returned if:

- nominal_rate ≤ 0.
- npery < 1.

This function is not supported for use in DirectQuery mode when used in calculated columns or row-level security (RLS) rules.

## Example

Data |
Description |
---|---|

5.25% | Nominal interest rate |

4 | Number of compounding periods per year |

The following DAX query:

```
EVALUATE
{
EFFECT(0.0525, 4)
}
```

Returns the effective interest rate using the terms specified above.

[Value] |
---|

0.0535426673707584 |

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