Question

A nominal interest rate of 10% per year, compounded monthly, is most closely:

1% per month

5.11% per six months

10% per year

4.98% per six months

Answer 1

Interest rate 10%


per month interest 0.008333333


compounded montly per year interest rate 1.104713067-1 = 0.104713 = 10.47%


compounded montly six months interest rate 1.051053313 - 1 = 0.051053 = 5.105331 %


So option 2 is the answer 5.11% per six months