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The effective rate that is equivalent to a nominal rate of 16% compounded semi-annually is: |
15.32% 16.64% 16.75% 18.24% |
16.64% |
The correct answer is Option (2) → 16.64% $\text{Effective rate} = \left(1 + \frac{0.16}{2}\right)^2 - 1$ $= (1.08)^2 - 1 = 1.1664 - 1 = 0.1664$ $\text{Effective rate} = 16.64\%$ |
