Financial Terminology

What Is Annual Percentage Yield (APY)?

The actual rate of return earned on a deposit or investment over one year, taking into account the effect of compound interest.

Detailed Financial Context & Application

Annual Percentage Yield reflects how frequently interest is compounded (daily, monthly, quarterly). Because interest earns interest over time, APY is always greater than or equal to the stated nominal interest rate. It is the primary metric used to evaluate high-yield savings accounts and certificates of deposit.

Calculate Annual Percentage Yield (APY) in Practice

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