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you are considering an investment that has a nominal annual interest rate of 7.88percent compounded semiannually...

you are considering an investment that has a nominal annual interest rate of 7.88percent compounded semiannually .therefore the effective annual rate or EAR (anual percentage yield)is....
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Answer #1

Nominal Interest Rate = 7.88% compounded semiannually

Calculating Effective Annual Rate(EAR) :-

where,

r = Nominal Interest rate = 7.88%

m = no of times compounding in a year = 2 (compounded semiannually)

EAR = 1.08035236 - 1

EAR = 8.0352%

SO, Effective Annual Rate is 8.0352%

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