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How does the annual percentage yield (APY) help a person decide whether to put his...

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How does the annual percentage yield (APY) help a person decide whether to put his money in Bank A or Bank B if both are offering 24- month CDs at 4.25% interest? The APY will tell the person which bank has earned the highest profits in the past year. The APY is able to determine whether the earnings on the CD will keep ahead of the rate of inflation. If Bank A has a higher credit rating than Bank B, Bank A will have a higher APY. The APY will show the actual interest rate earned as opposed to the stated rate after the frequency of compounding is taken into effect.

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