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Acronyms Dictionary

APY

Definition

Annual Percentage Yield. The real rate of return earned on a savings deposit or investment taking into account the effect of compounding interest.

Deep Dive

APY measures the actual rate of return on an account or investment over one year, accounting for the effect of compounding interest. Compounding happens when you earn interest on your original deposit plus the interest you've already earned.

Examples & Use Cases

  • 1A high-yield savings account offering a 4.50% APY compounded daily
  • 2Calculating the total growth of a crypto staking reward over a year using APY
  • 3Comparing two investment funds where one compounds monthly and the other quarterly

Related Terms

APRCompound InterestROI

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