What is the effective rate of $18,600 invested for 1 year at 7.5%, compunded semianually?

a) 7.64%


b) 7.09%


c) 3.82%


d) 3.75%

What is the effective rate of $18,600 invested for 1 year at 7.5%, compunded semianually?
A. You know if it is compounded more than once a year the rate is higher that 7.5%. A is the only answer that fits that.
Reply:a. Treat it like it is two seperate periods using half the 7.5%, then do a PV solve.

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