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The interest is compounded semiannually

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You just invested $25,000 in an account that pays an 9% nominal interest rate. The interest is compounded semiannually. Which of the following statements is CORRECT?

The periodic rate of interest is 9% and the effective rate of interest is less than 9%.

The periodic rate of interest is 9% and the effective rate of interest is greater than 9%.

The periodic rate of interest is 3% and the effective rate of interest is 6%.

The periodic rate of interest is 4.5% and the effective rate of interest is 4.5%.

The periodic rate of interest is 4.5% and the effective rate of interest is greater than 9%

Reference no: EM131599582

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