APR is 20%, compounded monthly. What is the semiannual effective interest rate?

Question

Question

Answer 1

Answer #1

i = 20%
monthly interest rate (r) = 20%/12 = 1.67%
semiannual effective interest rate = (1 + monthly interest rate)⁶ - 1

semiannual effective interest rate = (1 + 1.67%)⁶ - 1 = 10.426%

Answer 2

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