The yield after taking into account the consequences of compounding. It is computed as [1 + (stated interest/n)]n - 1; where n is the number of payments within the year. For instance, a bond's return is 5% and is to be paid semi-annually, thus, the effective annual yield is calculated as: [1 + (.05/2)2 - 1 = 5.062%.
Related information about effective annual yield:
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Effective Annual Yield. Also found in: Acronyms, Wikipedia, 0.01 sec. Effective annual yield. Annualized interest rate on a security computed using compound ...
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Annual percentage yield or effective annual yield is the analogous concept used for savings or investment products, such as a certificate of deposit. Since any ...
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At CalcXML we developed a user friendly calculator to help you determine the effective annual yield on an investment.
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Definition of effective annual yield: The yield after taking into account the consequences of compounding. It is computed as [1 + (stated interest/n)]n - 1; where n ...
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An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following:
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Investopedia's Free CFA Level 1 Exam Online Study Guide. Learn the calculations behind an effective annual yield and how it differs from holding period yield.
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Explanation. The effective annual rate is a value used to compare different interest plans. If two plans were being compared, the interest plan with the higher ...
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Effective Annual Yield Depositor's yield earned on a savings account or time deposit, including compounded interest, assuming the funds remain in the account.