If the stated interest rate is 12% per year, but it is compounded semiannually, then the adjusted rate used for present or future value calculations will be
A)12% per year.
B)3% per quarter.
C)6% per 6-month period.
D)1% per 6-month period.

Question

Quizplus · Accepted Answer

If the interest is compounded semiannually, we need to use the semiannual interest rate for present or future value calculations. The semiannual interest rate is half of the annual interest rate, so in this case, it would be 6% per 6-month period.

If the Stated Interest Rate Is 12% Per Year, but It