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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 x	❨	1 +	3	❩	2	]	= Rs. 106.09
							100

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

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