Annual Percentage Yield

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This is the actual rate of return on an investment such as a certificate of deposit, when compound interest is taken into account. Simple interest paid at an interest rate of 1 percent a month will produce an annual return of 12%. But if the interest is compounded monthly, the return or yield after a year will actually be 12.68%. Sellers of certificates of deposit (whose interest payments are usually compounded) typically advertise the annual percentage yield rather than an interest rate.