If interest on a savings account is compounded semiannually,the effective rate of interest will be

Question

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When interest is compounded semiannually, the interest earned in each six-month period is added to the principal for the next six-month period. This means that the interest is being earned on both the principal and the previously earned interest, resulting in a higher effective rate of interest than the nominal rate.

If Interest on a Savings Account Is Compounded Semiannually,the Effective