What is the annual percentage yield (APY) for money invested at the given annual rate? Round results to the nearest
hundredth of a percent.
-5% compounded semiannually
A) 5.06%
B) 5.13%
C) 5.00%
D) 5.09%

Question

What is the annual percentage yield (APY) for money invested at the given annual rate? Round results to the nearest
 hundredth of a percent.
-5% compounded semiannually
A) 5.06%
B) 5.13%
C) 5.00%
D) 5.09%

Quizplus · Accepted Answer

The APY can be calculated using the formula for compound interest: APY = (1 + r/n)^(n*t) - 1, where r is the annual interest rate (as a decimal), n is the number of compounding periods per year, and t is the time in years. For 5% compounded semiannually, r = 0.05, n = 2, and t = 1. Plugging these values into the formula gives APY = (1 + 0.05/2)^(2*1) - 1 = 1.025^2 - 1 = 1.050625 - 1 = 0.050625 or 5.06% when converted to a percentage and rounded to the nearest hundredth.

What Is the Annual Percentage Yield (APY) for Money Invested