EAR = (1 + Annual rate/Compounding frequency)^(Compounding frequency) - 1 = (1 + 10%/2)^2 - 1 = (1 + 0.05)^2 - 1 = (1.05)^2 - 1 = 1.1025 - 1 = 0.1025 = 10.25%

The effective annual rate (EAR) accounts for the effect of compounding within the year. With semi-annual compounding at a stated rate of 10%, the EAR is 10.25%.