Let us consider investing for six months, at an annual percentage rate  with semiannual compounding. After six months, we will obtain

Quoting a rate with annual compounding is not quite convenient in this case. To see why, let us recall that we may convert a rate with semiannual compounding to a rate with annual compounding, and vice versa, using the relationship

 

In principle, for the above investment, we might quote an annual rate

 

Then, the cash flow after six months should be calculated as

 

We find the same result as before, but in a somewhat twisted way.

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