Effective Annual and Percentage Yields
Annual rate and yield measures used to compare compounding conventions and consumer deposit quotations.
Banking terms for APY, AER, effective annual rates, compounding, money-market yields, and day-count conventions.
Effective yields and compounding terms translate quoted interest rates into comparable annualized costs or returns after compounding and day-count conventions are considered.
Use this branch when two rates look similar but are quoted on different bases, compound at different frequencies, or use different money-market conventions.
| Area | Use it for |
|---|---|
| Effective Annual and Percentage Yields | APY, AER, effective annual rate, and nominal-versus-effective comparisons. |
| Money Market, Day Count, and Annuity Rates | Actual/360, banker-year, money-market yield, and annuity-rate conventions. |
A 5% nominal rate compounded monthly is not the same as a 5% effective annual yield. A money-market instrument quoted on an Actual/360 basis may not compare cleanly with a deposit account quoted by APY. The right comparison depends on cash-flow timing, compounding, fees, and disclosure rules.
These pages explain rate conventions for education; actual product outcomes depend on the contract and applicable disclosure rules.
Choose a subsection first. Deeper term pages live inside each subsection, which keeps large topic hubs readable.
Annual rate and yield measures used to compare compounding conventions and consumer deposit quotations.
Rate conventions for short-term instruments, elapsed-day calculations, banker-year assumptions, and annuity cash flows.