Answer:
continuous compounding rate = 5.61 %
semi annual compounding rate = 5.34 %
Explanation:
The effective interest rate is also known as the continuous compounding rate. This is the interest amount that if compounded once a year, would give us the same results as interest per period compounded a number of times a year.
continuous compounding rate :
5.5% Shift NOM %
4 P/YR
SHIFT EFF % = 5.61 %
semi annual compounding :
SHIFT EFF % = 5.61 %
2 P/YR
SHIFT NOM % = 5.34 %
