The effective rate equivalent to a nominal rate of 6% compounded monthly is the rate at which an investment will grow or an amount of money will increase over a specific period of time. In order to calculate the effective rate, we need to consider the compounding period and the number of compounding periods in a year.

Formula:
The formula to calculate the effective rate is:

Effective Rate = (1 + (Nominal Rate / Number of Compounding Periods)) ^ Number of Compounding Periods - 1

Given:
Nominal Rate = 6%
Compounding Period = Monthly

Steps to Calculate the Effective Rate:

1. Convert the nominal rate to a decimal:
Nominal Rate = 6% = 0.06

2. Determine the number of compounding periods in a year:
Since the compounding period is monthly, there are 12 compounding periods in a year.

3. Substitute the values into the formula and calculate:

Effective Rate = (1 + (0.06 / 12)) ^ 12 - 1

Calculations:

Effective Rate = (1 + 0.005) ^ 12 - 1
Effective Rate = (1.005) ^ 12 - 1
Effective Rate = 1.061678 - 1
Effective Rate = 0.061678

Interpretation:
The effective rate equivalent to a nominal rate of 6% compounded monthly is approximately 0.061678, or 6.17%.

Conclusion:
When the nominal rate is compounded monthly at a rate of 6%, the effective rate is approximately 6.17%. This means that an investment or amount of money will grow by 6.17% over a specific period of time when the interest is compounded monthly.

6.17%