Find the effective interest rate given an annual rate of 9% and a compounding frequency of 2.Round your answer to two decimal places.
A)9.2%
B)9.25%
C)9.18%
D)9.15%
E)9.22%

Question

Quizplus · Accepted Answer

The effective interest rate is given by the formula (1 + (annual rate / compounding frequency))^compounding frequency - 1. Plugging in the given values, we get (1 + (0.09 / 2))^2 - 1 = 0.0925, or 9.25%.

Find the Effective Interest Rate Given an Annual Rate of 9