Find the effective rate of return equivalent to declared rate of 12% compounded semiannually.

[Use $(1.06)^2=1.1236, (1.03)^4=1.1255$ and $(1.01)^2= 1.1268, e^{0.12}= 1.1275$]

12.36%

The correct answer is option (2) : 12.36%

Given r = 12% p.a

P = 2 half year

So, effective rate (per rupee) $=\left(1+\frac{12}{200}\right)^2-1$

$= (1.06)^2-1$

$= 0.1236$

Hence, effective rate $= 0.1236 ×100$%

= 12.36%