ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The annual percentage yield (APY) is the real rate of return earned on an investment, taking into account the effect of compounding interest. Unlike simple interest, compounding interest is calculated periodically and the amount is immediately added to the balance.

Detailed explanation-2: -APY refers to the amount of interest earned on your savings and APR is how much interest you owe. APR, which stands for Annual Percentage Rate, is the interest rate on an account plus any fees you’ll have to pay. It’s calculated on a yearly basis and shown as a percentage.

Detailed explanation-3: -Annual Percentage Yield (APY) is the percentage reflecting the total amount of interest paid on an account based on the interest rate and frequency of compounding for a 365-day period.

Detailed explanation-4: -If you’re in the mood for a little math, you can calculate the APY on any bank account using this formula: APY = (1+r/n)n-1. In this equation, “r” stands for the listed annual interest rate as a decimal. If the interest rate is listed as 0.04%, you’d insert it as 0.0004 in the formula.

Detailed explanation-5: -If you’re looking to understand the math behind calculating your APY, there’s a formula: APY = APY = 100 [(1 + Interest/Principal)(365/Days in term)-1]. But we think it’s easier to use a calculator, so all you need to do is plug in the required information.