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

6.06%
6.07%
6.08%
6.09%

Correct Answer: 6.09%

Explanation:

Amount of Rs. 100 for 1 year

when compounded half-yearly = Rs.[100*(1+3/100)^2]=Rs.106.09

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

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