Imagine a local bank representative is assisting you with establishing an account. The account you two are discussing has an APR of 6.5%. Determine the APY with quarterly compounding and with monthly compounding. How does changing the compounding period affect the annual yield?

Answer 1

say $100 apr 6.5 simple = 6.50%

at 6.5 quarterly
(.065/4 +1)^4 = 1.0667 so 6.67 %

at 6.5 monthly
100 (.065/12 +1)^12 = 1.06697 so 6.70%

Answer 2

uncomplete need to know APY after find the value of A