What is the effective annual interest rate equivalent to a nominal rate of 6% per year compounded semi-annually?

Explanation

If Rs. 100 is invested for one year with interest compounded semi-annually at a nominal rate of 6%, the amount becomes 100 × (1 + 0.03)^2 = Rs. 106.09. Therefore, the effective annual interest rate is (106.09 - 100) = 6.09%.