[cmill511]

If a firm pays 10% compounded semiannually, the true rate of interest is greater than 10%?

[CaptainForest]

if a firm pays 10% compounded semiannually, the true rate of interest is greater than 10%?

Yes


(1 + .10/2)^2 - 1 = .1025 = 10.25%

[iceberg1002]

The more frequently interest is compounded, the larger will be the final or terminal amount.

[morgaine300]

Please watch the dates on the posts. The search tends to drag up old stuff.