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The effective rate equivalent to a normal rate of 8% per annum compounded semi annually is : |
6.16% 8.16% 7.16% 8.26% |
8.16% |
The correct answer is Option (2) → 8.16% The effective Annual Interest Rate is, $r_{eff}=\left(1+\frac{r}{n}\right)^n-1$ $=\left(1+\frac{0.08}{2}\right)^2-1$ $=1.0816-1$ $=0.0816=8.16\%$ |
