Question

A bank offers an APR of 6.4% compounded daily. The annual percentage yield is what percentage?

Answer 1

Answer:

The annual percentage yield is 6.609%

Step-by-step explanation:

Let's assume

amount invested=$1

so, P=1

APR of 6.4% compounded daily

so, r=6.4%=0.064

n=365

t=1

now, we can use formula

$A=P(1+\frac{r}{n})^{nt}$

now, we ca plug values

$A=1(1+\frac{0.064}{365})^{365\times 1}$

we get

$A=1.06609$

now, we can find APY

$APY=\frac{A-P}{P}\times 100$

now, we can plug values

$APY=\frac{1.06609-1}{1}\times 100$

we get

APY is 6.609%

Answer 2

Answer:

The annual percentage yield is 6.609%.

Step-by-step explanation:

The annual percentage yield is calculated by:

APY = $(1+\frac{r}{n} )^{n} -1$

where r is the percentage rate and n refers to the number of times compounded.

So, r = $\frac{6.4}{100}$ = 0.064

Since the APR is compounded daily,

n = 365

Now,

APY = $(1+\frac{0.064}{365} )^{365} -1$

= 6.609% approximately