Interest rates

Annual percentage yield

Annual percentage yield (APY) is a normalized representation of an interest rate, based on a compounding period of one year. APY figures allow a reasonable, single-point comparison of different offerings with varying compounding schedules. However, it does not account for the possibility of account fees affecting the net gain. APY generally refers to the rate paid to a depositor by a financial institution, while the analogous annual percentage rate (APR) refers to the rate paid to a financial institution by a borrower. To promote financial products that do not involve debt, banks and other firms will often quote the APY (as opposed to the APR because the APY represents the customer receiving a higher return at the end of the term). For example, a certificate of deposit that has a 4.65% APR, compounded monthly, would instead be quoted as a 4.75% APY. (Wikipedia).

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Annual Percentage Rate vs Annual Percentage Yield

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From playlist 9-1 GCSE Chemistry Paper 1 Quantitative Chemistry

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From playlist 9-1 GCSE Chemistry Paper 1 Quantitative Chemistry

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From playlist Level 1 Chartered Financial Analyst (CFA ®) Volume 1

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Related pages

Annual percentage rate | Normalization (statistics) | Nominal interest rate | E (mathematical constant) | Compound interest | Effective interest rate | Annual equivalent rate | Interest rate