The effective rate that is equivalent to a normal rate of 8% compounded semi annually is
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 0.0816
Effective Rate = $\left(1+\frac{r}{n}\right)^n-1$
$=\left(1+\frac{0.08}{2}\right)^2-1$
$=1.0816-1$
$=0.0816$