You read that a savings account offers a 10% yield,compounded semi-annually.Your effective annual yield then is
A)10.25%.
B)11.00%.
C)9.75%.
D)5.05%.

Question

Quizplus · Accepted Answer

To calculate the effective annual yield we use the formula: 
(1 + (r/n))^n - 1,

where r is the annual interest rate and n is the number of times the interest is compounded in a year.

So for this problem, r = 10% and n = 2 (since the interest is compounded semi-annually).

Plugging these values into the formula, we get:

(1 + (0.10/2))^2 - 1 = 0.1025 or 10.25%

Therefore, the effective annual yield is 10.25%.

You Read That a Savings Account Offers a 10% Yield,compounded