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

1. 

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

Explanation:

Amount of Rs. 100 for 1 year
when compounded half-yearly		 1-sym-cbrace-h2 = Rs. 1-sym-obracket-h1 100 x 1-sym-oparen-h1 1 + 3 1-sym-cparen-h1 2 1-sym-cbracket-h1 = Rs. 106.09
100

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

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