Aptitude - Compound Interest - Discussion
Discussion Forum : Compound Interest - General Questions (Q.No. 10)
10.
The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is:
Answer: Option
Explanation:
| Amount of Rs. 100 for 1 year when compounded half-yearly |
 |
= Rs. |  |
100 x |  |
1 + | 3 |  |
2 |  |
= Rs. 106.09 |
| 100 |
Effective rate = (106.09 - 100)% = 6.09%
Discussion:
43 comments Page 5 of 5.
Sathya said:
1 decade ago
The effective rate is the actual rate that you earn on an investment or pay on a loan after the effects of compounding frequency are considered.
Formula for Effective Rate = (1 + (i / n))^n -1
i = Nominal or stated interest rate
n = Number of compounding periods per year
Formula for Effective Rate = (1 + (i / n))^n -1
i = Nominal or stated interest rate
n = Number of compounding periods per year
Jasika said:
1 decade ago
Yeah. How we can find rate by subtracting principal from amount in the form of %?
Praveen said:
1 decade ago
What is effective rate?
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