Question

Joanne deposits $5,300 into a 3-year CD at a rate of 2.4% compounded quarterly. What is her Annual Percentage Yield (APY)?

Answer 1

2.4%

Explanation:

APY=(1+r/n)^n-1 r=annual interest rate, n=compounding periods per year

APY=(1+0.024/4)^4-1

APY=(1.006)^4-1

APY=1.02421687-1

APY≈0.024=2.4%