InvestorWords.com

Annual Percentage Yield

Definition

APY. The rate of return on an investment for a one-year period. For an interest-bearing deposit account, such as a savings account, APY is equal to one plus the periodic rate (expressed as a decimal) raised to the number of periods in one year. This value is then subtracted by one. Due to compounding, the APY will be greater than the periodic interest rate multiplied by the number of periods in the year.

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