Question

What is the effective annual yield of 6% compounded semi-annually? Answer in the percent format. Round to the nearest hundredth percent. Do not include any unity (If your answer is 4.36%, then enter 4.36 as your answer without % sign).

Answer 1

Answer:

effective annual yield = 6.09

Explanation:

given data

rate r = 6%

compounded semi-annually

solution

we get here effective annual yield that is express as

effective annual yield = $(1+\frac{r}{n} )^n$ - 1   ..................1

here n is 2 for semi-annually

put here value and we get

effective annual yield = $(1+\frac{0.06}{2} )^2$ - 1

effective annual yield = 0.0609

effective annual yield = 6.09 %

effective annual yield = 6.09