What is the annual percentage yield (APY) for money Invested at an annual rate o

Question

What is the annual percentage yield (APY) for money Invested at an annual rate of 4.66% compounded monthly? 4.67% compounded quarterly? What is the annual percentage yield (APY) for money invested at an annual rate of 4.66% compounded monthly? The APY is %. (Type an integer or decimal rounded to three decimal places as needed.) What is the annual percentage yield (APY) for money invested at an annual rate of 4.67% compounded quarterly? The APY is %. (Type an integer or decimal rounded to three decimal places as needed.) Enter your answer in each of the answer boxes.

Explanation / Answer

We know that

Annual percentage yield(APY) = [ 1 + (r/N) ]N - 1

Where ,

r = Rate of interest as decimal

N = Number of compoundings per year

A ) Given that

r = 4.66% compounded monthly

r = (4.66)/100 = 0.0466

N = 12 [ since , compounded monthly ]

Hence ,

APY =  [ 1 + (0.0466/12) ]12 - 1

Apy = 4.761%

B ) Given that

r = 4.67% compounded weekly

r = (4.67)/100 = 0.0466

N = 52 [ since , compounded weekly ]

Hence ,

APY =  [ 1 + (0.0466/52) ]52 - 1

APY = 4.778%

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