Question

If the nominal interest rate per year is 16,5% per annum, compounded at the end of every second month, then the effective interest rate is

1.     18,00%.

2.     16,18%.

3.     14,53%.

4.     16,68%.

5.     17,68%.

Answer 1

$r=(1+i/n)^n-1=(1+0.165/6)^6-1=0.1768=17.68\ \%$

Answer: 5. $17.68\ \%$