Moronke O. answered • 07/21/20

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# The Annual Percentage Yield (APY) is calculated using the following formula:

# APY = (1 + r)/ -1

# r = stated annual interest rate

# n = nos of compounding periods each year

# APY takes account of compound interest and it is greater than periodic interest. It is calculated annually.

# APY = (1 + 0.06)^2 -1) =

# 0.1236 *100 = $12.36

# If the corporate bond pays $12.36 in interest on $10,000 bond (where 6 months contains 182 days) use this formula to calculate semi- annual yield:

# APY = 100[(1 + 12.36/10,000) (365/182) -1]

Years | Starting balance | Interest earned | Ending balance |

Year 1(May-Nov) | 10,000 | ||