What will be the effective rate of interest for the first year, if the rate of interest is 40% p.a. compounded semi-annually?
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By now, you have a clear understanding of simple and compound interest. However, when interest is compounded, for more than one year, the actual interest rate per annum is lesser than the effective rate of interest. In this article, we will look at the definition, formula, and some examples of calculating the effective rate of interest.
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