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a bank offers an APR of 1.39% compounded monthly what is the annual percentage yield

Sagot :

The formula for APY (Annual Percentage Yield) is:
(1+r/n)^n -1
r=rate. 0.0139 in this case which we get by dividing 1.39% by a 100.
n=number of times compounded. 12 in this cases (compounded monthly. there are 12 months in a year, and we are trying to find the *annual* percentage yield. Annual means 1 year=12 months).

Let's plug in the numbers:
(1+0.0139/12)^12-1
=0.01398889730
Let's convert to percentage by multiplying the result by a 100 (or moving the period twice to the right):
=0.01398889730*100
=1.398889730%
As a personal preference I will round to the hundredth place (you can round to whatever place you like):
1.40%

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