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Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Annual Percentage Yield

The yield on an investment in one year, taking into account the effects of compounding. For example, if one has a fixed-income investment such as certificate of deposit that pays 3% in interest each month, the annual percentage yield is more than 3% because compounding the interest results in a (slightly) higher return each month. In this example, the annual effective yield is calculated thus:

Annual percentage yield = (1.03)^12 - 1 = .43 = 43%, where 1.03 is 1 plus the monthly interest and 12 is the number of times in a year interest is compounded. It is also known as the annual effective yield.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

Annual percentage yield (APY).

Annual percentage yield is the amount you earn on an interest-bearing investment in a year, expressed as a percentage. For example, if you earn $60 on a $1,000 certificate of deposit (CD) between January 1 and December 31, your APY is 6%.

When the APY is the same as the interest rate that is being paid on an investment, you are earning simple interest. But when the APY is higher than the interest rate, the interest is being compounded, which means you are earning interest on your accumulating interest.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Kumar also exhorted banks to find innovative tools to push APY.
Under the APY, the subscribers would receive the pension of Rs 1,000-5,000 per month at the age of 60 years, depending on their contributions.
"After careful consideration of the feedback from various quarters, the government has decided that the contribution by the Central government of 50 per cent of the total prescribed contribution up to `1,000 per annum, will be available for those eligible subscribers, who join APY before March 31, 2016," said a statement from the ministry.
The 10 best national and online checking accounts carried an average APY of 0.22%, with the highest being 1.40% at EverBank.
The government will also co-contribute 50 per cent of your contribution or Rs 1,000 per annum, whichever is lower, for a period of five years (from 2015/16 to 2019/20) provided you join the APY before December 31, 2015, and you are not an income-tax payer.
Likewise, the average APY on money market accounts was a measly 0.15 percent, a dip of 0.04 percent from the year-ago period.
While the implications of these changes are strongly contested, this paper draws on fieldwork on the Anangu Pitjantjatjara Yankunytjatjara (APY) Lands in remote South Australia to suggest that the unintended consequences may be a greater incidence of welfare passivity and reduced support for remote-living Aboriginal people to find non-CDEP work.
Not only can you use ATMs for free across the nation, have 24/7 online access and receive free e-statements, you can also earn a savings account interest rate of 2.52% APY.
During his pounds 38,000, six-week stay, the celeb will have one-to-one ther-r apy and will learn the benefits of "shame reduction" and "setting sexual boundaries".
Metropolitan National Bank of New York [Metbank] announced a promotional rate increase on its liquid Money Market Account to 4.75% APY for new depositors.