Given :
A bank advertises an interest rate of 4% per year, compounded monthly.
To Find :
The APY ( Annual Percentage Yield ) .
Solution :
APY is given by :
[tex]API=(1+\dfrac{r}{n})^{n}-1[/tex]
Here , r is annual interest rate .
n is number of compound period .
Putting these values in above equation :
[tex]API=(1+\dfrac{4}{12})^{12}-1\\\\API=30.56\%[/tex]
Therefore , the APY is 30.56% .
Hence , this is the required solution .
