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

Solution (By Examveda Team)

$$\eqalign{ & {\text{Amount}}\,{\text{of}}\,{\text{Rs}}{\text{.}}\,{\text{100}}\,{\text{for}}\,{\text{1}}\,{\text{year}}\,{\text{when}}\, \cr & {\text{compounded}}\,{\text{half - yearly}} \cr & = Rs.\,\left[ {100 \times {{\left( {1 + \frac{3}{{100}}} \right)}^2}} \right] \cr & = Rs.\,106.09 \cr & \therefore {\text{Effective}}\,{\text{rate}} = \left( {106.09 - 100} \right)\% \cr & = 6.09\% \cr} $$