Solve the problem.
-Find the annual percentage yield if the interest rate is 4.0% and interest is compounded monthly.
A) 4.07%
B) 4.32%
C) 3.82%
D) 4.57%

Question

Quizplus · Accepted Answer

The annual percentage yield (APY) can be calculated using the formula APY = (1 + r/n)^(n*t) - 1, where r is the annual interest rate (as a decimal), n is the number of compounding periods per year, and t is the time in years. For a 4.0% interest rate compounded monthly, r = 0.04, n = 12, and t = 1. Plugging these values into the formula gives APY = (1 + 0.04/12)^(12*1) - 1 = 1.0407 - 1 = 0.0407 or 4.07%.

Solve the Problem. -Find the Annual Percentage Yield If the Interest Rate Is