Effective Rate find the effective rate of interest corresponding to a nominal rate of 9% per year compounded.

(a) annually

(b) semiannually

(c) quarterly

(d) monthly

The effective rate of return can be calculated using formula given below.

ER = (1+I) ^n-1

where i is nominal rate and n is number of payment in an year. So

(a) annually

ER = (1+9%) ^1 - 1 = 9% (same)

(b) semiannually

ER = (1+9%/2) ^2-1 = 9.2%

(c) quarterly

ER = (1+9%/4) ^4-1 = 9.31%

(d) monthly

ER = (1+9%/12) ^12-1 = 9.34%