1.  The effective annual rate of interest corresponding to a nominal rate of 6% per annum payable half-yearly is:
A. 6.06%
B. 6.07%
C. 6.08%
D. 6.09%

Answer: Option D

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%