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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The annual percentage yield was good because it was actually a return on the investment that we had made recently.

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You should do your best to correctly calculate the annual percentage yield so that you know what to expect from it.

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The annual percentage yield of the CDs offered by my bank is slightly greater than the nominal rate given interest is paid monthly and compounded throughout the year.

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annual return interest rate