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ANNUAL PERCENTAGE YIELD. — The term "annual percentage yield" means the total amount of interest that would be received on a $ 100 deposit, based on the annual rate of simple interest and the frequency of compounding for a 365-day period, expressed as a percentage calculated by a method which shall
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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
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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
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as a limit). This is a reasonable approximation if the compounding is daily. Also, it is worth noting that a nominal interest rate and its corresponding APY are very nearly equal when they are small. For example (fixing some large
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288:), a nominal interest rate of 100% would have an APY of approximately 171%, whereas 5% corresponds to 5.12%, and 1% corresponds to 1.005%.
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518:"interest" is the total dollar amount of interest earned on the Principal for the term of the account,
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515:"principal" is the amount of funds assumed to have been deposited at the beginning of the account,
304:, the calculation of the APY and the related annual percentage yield earned are regulated by the
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that has a 4.65% APR, compounded monthly, would instead be quoted as a 4.75% APY.
140:{\displaystyle {\text{APY}}=\left(1+{\frac {i_{\text{nom}}}{N}}\right)^{N}-1,}
618:"FDIC Law, Regulations, Related Acts - Consumer Financial Protection Bureau"
50:(APR) refers to the rate paid to a financial institution by a borrower.
521:"days in term" is the actual number of days in the term of the account.
632:"FDIC Law, Regulations, Related Acts - Consumer Protection"
562:"Cutting Credit Costs: Annual Percentage Rates and Yields"
501:{\displaystyle {\text{interest}}={\text{principal}}\left.}
261:{\displaystyle {\text{APY}}\approx e^{i_{\text{nom}}}-1,}
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formula, but the precise usage may depend on local laws.
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One common mathematical definition of APY uses this
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316:be prescribed by the Board in regulations.
19:"APY" redirects here. For other uses, see
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279:(the formula follows the definition of
593:"Why You Need to Know Interest Rates"
413:Algebraically, this is equivalent to
403:{\displaystyle {\text{APY}}=100\left}
320:The calculation method is defined as
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46:institution, while the analogous
173:{\displaystyle i_{\text{nom}}}
1:
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277:base of natural logarithms
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542:Effective interest rate
68:effective interest rate
27:Annual percentage yield
532:Annual equivalent rate
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298:financial institutions
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56:certificate of deposit
48:annual percentage rate
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182:nominal interest rate
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37:representation of an
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309:Truth in Savings Act
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21:APY (disambiguation)
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537:Compound interest
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199:{\displaystyle N}
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597:www.axosbank.com
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652:Interest rates
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16:Financial term
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574:on 2013-05-22
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41:, based on a
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39:interest rate
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600:. Retrieved
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576:. Retrieved
569:the original
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471:days in term
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384:days in term
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43:compounding
602:2019-04-16
578:2013-10-23
548:References
210:For large
35:normalized
485:−
433:principal
390:−
364:principal
311:of 1991:
250:−
230:≈
129:−
646:Category
526:See also
425:interest
361:interest
214:we have
62:Equation
300:in the
275:is the
180:is the
150:where
33:) is a
271:where
572:(PDF)
565:(PDF)
511:Here
306:FDIC
296:For
480:365
453:100
450:APY
375:365
339:100
332:APY
243:nom
226:APY
184:and
166:nom
108:nom
82:APY
31:APY
648::
595:.
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620:.
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581:.
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488:1
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286:N
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113:N
104:i
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91:(
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29:(
23:.
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