?
The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half yearly is = ?
Answer & Solution
Correct Answer:
Option
D
Amount of Rs. 100 for 1 year when compounded half yearly
$$\eqalign{ & {\text{ = Rs}}{\text{.}}\left[ {100 \times {{\left( {1 + \frac{3}{{100}}} \right)}^2}} \right] \cr & = {\text{Rs}}.106.09 \cr & \therefore {\text{Effective rate}} \cr & {\text{ = }}\left( {106.09 - 100} \right)\% \cr & = 6.09\,\% \cr} $$
$$\eqalign{ & {\text{ = Rs}}{\text{.}}\left[ {100 \times {{\left( {1 + \frac{3}{{100}}} \right)}^2}} \right] \cr & = {\text{Rs}}.106.09 \cr & \therefore {\text{Effective rate}} \cr & {\text{ = }}\left( {106.09 - 100} \right)\% \cr & = 6.09\,\% \cr} $$
Join the Discussion
Login to post a comment or share your explanation.
Login