If the nominal interest rate is 12% per year compounded monthly, then the effective interest rate per six-months will bemr(¹+)"mequal to 1+- 1, whereOA. r= 12% and m = 12;OB. r= 1% and m = 12;OC. r= 6% and m = 6;O D. r= 6% and m = 2;O E. r= 1% and m = 6;

Given: Interest rate = 12% Compounding =Monthly Want effective rate for 6 months.

If the nominal interest rate is 12% per year compounded monthly, then the effective interest rate per six-months will be m equal to 1+ r m -1, where OA. r= 12% and m = 12; OB. r= 1% and m = 12; OC. r= 6% and m = 6; D. r= 6% and m = 2; O E. r= 1% and m = 6;

If the nominal interest rate is 12% per year compounded monthly, then the effective interest rate per six-months will be m equal to 1+ r m -1, where OA. r= 12% and m = 12; OB. r= 1% and m = 12; OC. r= 6% and m = 6; D. r= 6% and m = 2; O E. r= 1% and m = 6;

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 31P

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Question

If the nominal interest rate is 12% per year compounded monthly, then the effective interest rate per six-months will be
m
r
(¹+)"
m
equal to 1+
- 1, where
OA. r= 12% and m = 12;
OB. r= 1% and m = 12;
OC. r= 6% and m = 6;
O D. r= 6% and m = 2;
O E. r= 1% and m = 6;

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