You are considering moving your money to new bank offering a one-year CD that pays a 10% APR with monthly compounding. Your current bank's manager offers to match the rate you have been offered. The account at your current bank would pay interest every six months. How much interest will you need to earn every six months to match the CD?

For an APR with k compounding periods: Therefore, the monthly discount rate is given by: where is the monthly discount rate, and is the annual percentage rate with monthly compounding. The equivalent n-period discount rate is given by: Therefore the equivalent 6-month discount rate to the monthly discount rate is given by: The equivalent 6-month discount rate is .

First convert APR into a monthly discount rate:

The monthly discount rate is

0.8333%.

(Round to four decimal places.)

Then compound the monthly discount rate into a 6 month interest rate:

The equivalent 6-month discount rate is ??? enter your response here%.