Find the Annual Percentage Yield (APY)

question 146

Multiple Choice

Find the annual percentage yield (APY) .
-A bank offers an APR of 2.4% compounded monthly.

• A)2.43%
• B)0.40%
• C)4.85%
• D)0.20%

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Definitions:

Deposits

Are funds placed into an account at a financial institution, creating a balance that can earn interest or be withdrawn for use.

Reserve Ratio

The fraction of depositors' balances that banks have to hold in reserve and not lend out.

Deposit Liabilities

The amounts of money that banks owe to their depositors, stemming from the bank accounts like savings, checking, and time deposits.

Federal Reserve

The central bank of the United States, responsible for setting monetary policy, supervising and regulating banks, and ensuring the stability of the financial system.