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SSC MTS 2023 PYQ — Question 15

SSC MTS - 08 May 2023 - Shift 1 • Quantitative Aptitude • Q15

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What is the effective annual rate of interest corresponding to a nominal rate of 10% per annum payable half-yearly?

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Correct answer: C

Explanation

The correct answer is option 3 i.e. 10.25%.

The nominal annual interest rate (r) = 10% or 0.10

The number of compounding periods per year (n) = 2

 Effective Annual Rate = (1+rn)n−1(1 + \frac{r}{n})^n - 1

⇒ (1+0.102)2−1(1 + \frac{0.10}{2})^2 - 1 

⇒ (1.05)2 − 1 = 0.1025

⇒ 10.25%