Use a stated rate of 9% compounded periodically to answer the following three questions. Select the choice that is the closest to the correct answer.
The semi-annual effective rate is:
A. 9.20%.
B. 9.00%.
C. 10.25%.
D. 9.31%.
Answer:A
First, we need to calculate the periodic rate, or 0.09 / 2 = 0.045.
Then, the effective semi-annual rate =  (1 + 0.045)2 − 1 = 0.09203, or 9.20%.