Question

Amanda's bank offers a savings account with a 2.8% APR, compounded monthly. What is the actual annual percentage yield on this account?

Answer 1

it is a. 2.84 percent

Answer 2

Answer:

The actual annual percentage yield is 2.84 %

Step-by-step explanation:

Since, the actual annual yield rate is,

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

Where, r is the stated annual interest rate,

n is the number of compounding periods per year,

Here, r = 2.8 % = 0.028,

And, n = 12

Thus, the actual annual yield rate is,

$i=(1+\frac{0.028}{12})^{12}-1$

$=0.0283621428759\approx 0.0284$

Hence, the actual annual percentage yield is 2.84 % ( approx ).