Annual Percentage Yield (APY)

What Is Annual Percentage Yield (APY)?

Annual Percentage Yield (APY) is a measure of the return on an investment over a one-year period. It takes into account both the interest rate and any compounding that may occur during the year, such as monthly or quarterly payments. APY is expressed as a percentage and can be used to compare different investments with each other in order to determine which offers the highest return for your money.

The calculation of APY involves taking into consideration all factors associated with an investment, including fees, taxes, and other charges that may apply. This makes it easier for investors to understand how much they will earn from their investments over time without having to calculate complex formulas themselves. Additionally, because APY includes compounding effects, it provides investors with more accurate information about potential returns than simply looking at the stated interest rate alone would provide.

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