Question

Question

Brian invests his money in an account paying 8% interest compounded semiannually. What is the effective annual yield on
this account? Enter your response as a percentage rounded to two decimal places and omit the percent sign (7.25%
should be input as 7.25.)

Answer 1

Explanation:

Semi-annual means an interest period is 1/2 year

1/2 *8% = 4% = .04

effective annual interest rate is then

(1+ .04)^2 - 1 = .0816 or 8.16 (%)