An investment earns 4.815% compounded semiannually. What is the APY?

Answer 1

To calculate the APY (Annual Percentage Yield) for an investment that earns 4.815% compounded semiannually, we can use the formula:

APY = (1 + (annual interest rate / number of compounding periods))^number of compounding periods - 1

In this case, the annual interest rate is 4.815% and the investment compounds semiannually, so there are 2 compounding periods per year. Plugging the values into the formula:

APY = (1 + (0.04815 / 2))^2 - 1
APY = (1 + 0.024075)^2 - 1
APY = (1.024075)^2 - 1
APY = 1.048
APY = 0.048 or 4.8%

Therefore, the APY for an investment that earns 4.815% compounded semiannually is 4.8%.