Question

Find the annual percentage yield (APY) in the following situation.A bank offers an APR of 4.51% compounded monthlyThe annual percentage yield is?(Do not round until the final answer. Then round to two decimal places as needed.)

Answer 1

Given the question in the question tab, we can get the annual percentage yield by following these steps:

Step 1:

$\begin{gathered} \text{Let P=\ 1},\text{ then we have} \\ A=1\times(1+\frac{0.0451}{12})^{12\times1} \\ A=1.046044033 \end{gathered}$

So the annual percentage yield becomes

$APY=\frac{1.046044033-1}{1}=0.04604403302$

Since APY is given in percentage, we convert to percentage, i.e,

$\begin{gathered} 0.04604403302\times100 \\ =4.604403302\text{ percent} \end{gathered}$

Hence, annual percentage yield is 4.60 percent to two decimal places.