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Annual Percentage Yield (APY)

Last Updated: November 14, 2006

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The yearly interest rate received from an investment. Also known as the effective yield. It takes into account how often the interest in paid (compounded). If two interest rates are the same, the one with the most compounding periods will have the highest APY (7% with daily compounding has a higher APY then 7% with quarterly compounding). It is important to always compare APY when comparing different interest rates before making an investment.

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