The effective rate that is equivalent to a nominal rate of 6% compounded semi-annually is :
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 6.09%
Effective rate = $\left(1+\frac{r}{m}\right)^m-1$
$=\left(1+\frac{0.06}{2}\right)^2-1$
$=1.0609-1=0.0609$
$=6.09\%$