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You want to invest $18,000 and are looking for safe investment options. Your bank is offering you a certificate of deposit that pays a nominal rate of 6% that is compounded semiannually. What is the effective rate of return that you will earn from this investment

Respuesta :

Cricetus

Answer:

The correct solution is "6.09%".

Explanation:

Given:

Nominal rate,

= 6%

or,

= 0.06

As we know,

⇒ [tex]EAR = [(1+\frac{APR}{m} )^m]-1[/tex]

By substituting the values, we get

             [tex]=[(1+\frac{0.06}{2} )^2]-1[/tex]  

             [tex]=[(1+0.03 )^2]-1[/tex]

             [tex]=1.0609-1[/tex]

             [tex]=6.09[/tex] (%)