The effective annual rate of interest corresponding to a nominal rate of 6% per

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Question

The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is:

Options:

A . 6.06%

B . 6.07%

C . 6.08%

D . 6.09%

Answer: Option D

Amount of Rs. 100 for 1 year
when compounded half-yearly = Rs. 100 x 1 + 3 2 = Rs. 106.09 100

Effective rate = (106.09 - 100)% = 6.09%

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