The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is:
A. 6.06%
B. 6.07%
C. 6.08%
D. 6.09%
Answer: Option D
Solution(By Examveda Team)
$$\eqalign{ & {\text{Amount}}\,{\text{of}}\,{\text{Rs}}{\text{.}}\,{\text{100}}\,{\text{for}}\,{\text{1}}\,{\text{year}}\,{\text{when}}\, \cr & {\text{compounded}}\,{\text{half - yearly}} \cr & = Rs.\,\left[ {100 \times {{\left( {1 + \frac{3}{{100}}} \right)}^2}} \right] \cr & = Rs.\,106.09 \cr & \therefore {\text{Effective}}\,{\text{rate}} = \left( {106.09 - 100} \right)\% \cr & = 6.09\% \cr} $$Join The Discussion
Comments ( 1 )
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