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Query in fm
What is Effective Rate of Interest?
This question if from Mock Test Paper May 2013. Does anyone have the solutions to the May mock papers? Since the Institute has uploaded the Nov 2013 mock papers the earlier ones have been deleted. TIA
Replies (2)
Dear Renuka,
Effective rate of interest simply means the effective yield on the amount. You have to take the declared rate as the base rate and then adjust it for the compounding effect.
Eg. If the rate of interest is 10% and the same is compounded half yearly, the effective rate is 10.250
If you have any queries, please ask
Ok got it Sir. Thank you.
CAclubindia
