The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is:

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Interest Test 5
Q:2

The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is:

6.06%

6.07%

6.08%

6.09%

Explanation:

Amount of Rs. 100 for 1 year
when compounded half-yearly= Rs $\left[100\times\left(1+\dfrac{3}{100}\right)^2\right]$= Rs. 106.09

$\therefore$ Effective rate = (106.09 - 100)% = 6.09%

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A bank offers 5% compound interest calculated on half-yearly basis. A customer deposits Rs. 1600 each on 1^st January and 1^st July of a year. At the end of the year, the amount he would have gained by way of interest is:

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