9.3 " What is the effective annual rate (EAR) if the stated rate is 8 percent and compounding occurs semiannually? Quarterly? " Under Semiannual Compounding: Semiannual Compounding: Nominal Rate 8% # of Compounding Periods 2 Under Quarterly Compounding: Quarterly Compounding: Nominal Rate 8% # of Compounding Periods 4 Effective annual interest rate = (1 + (nominal rate / number of compounding periods)) ^ (number of compounding periods) - 1 see page 353