Question
The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is:
Answer: Option D
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Amount of Rs. 100 for 1 year
when compounded half-yearly = \(Rs. \left[100\times\left(1+\frac{3}{100}\right)^{2}\right] = Rs. 106.09\)
So, Effective rate = (106.09 - 100)% = 6.09%
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