what is the annual percentage yield apy 
the annual percentage yield apy is the interest rate earned on an investment in one year including compounding interest a higher apy is better as your return will be higher you can compare apys at different financial institutions to ensure you re opening an account with the highest possible return investopedia julie bangformula and calculation of annual percentage yield apy apy standardizes the rate of return it does this by stating the real percentage of growth that will be earned in compound interest assuming that the money is deposited for one year the formula for calculating apy is apy 1 r n n 1 where r nominal rate n number of compounding periods begin aligned text apy bigg 1 frac r n bigg n 1 textbf where r text nominal rate n text number of compounding periods end aligned apy 1 nr n 1where r nominal raten number of compounding periods 