If EAR is 12% and compounding semiannually, what is the APR? options: 12.05% 11.66% 11.4% 11.48%

If EAR is 12% and compounding semiannually, what is the APR?

options: 12.05% 11.66% 11.4% 11.48%

Solutions

Expert Solution

Correct answer is Option 11.66%

We know,

where, i = Interest rate per period

n = Number of compunding period

Now, EAR = 12% , n = 2 (Two semiannual period per year)

Since 0.0583 is rate per semiannual period, Rate shall be,

0.0583 * 2 = 0.1166 or 11.66%

jeff jeffy answered 2 years ago

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