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What is the Nominal Interest Rate, the Interest Rate per Compounding Period and the Effective Annual...

What is the Nominal Interest Rate, the Interest Rate per Compounding Period and the Effective Annual Interest Rate if a bank is offering when their terms are 6.5% compounded semi-annually for 15 years?

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Answer #1

Nominal interest rate = 6.5% per year, compounded semiannually.

Interest rate per compounding period = 6.5/2 = 3.25%

Effective rate, r

Effective rate = 6.61% per year

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