What is the nominal rate per annum when interest is payable half-yearly that would be given an effective rate of 10% per annum?
Question
Solution 1
To find the nominal rate per annum when interest is payable half-yearly, we need to use the formula for the effective annual rate (EAR), which is:
EAR = (1 + i/n)^(nt) - 1
where:
- EAR is the effective annual rate
- i is the nominal interest rate
- n is the number of compounding periods per year
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