Question

Bianca's bank offers a savings account with a 2.1% APR, compounded monthly. What is the actual annual percentage yield on this account?

Answer 1

http://i.investopedia.com/inv/articles/site/basics_102904_1.gif

Answer 2

$$
\text{APR=2.1%}
\color{blue}{\text{ compounded monthly}}\text{, meaning a }\\
\\
\text{period of 12 per year, 12monts = 1year}\\
APY\color{red}{ = (1+APR)^{12}-1}
$$

Answer 3

or
\(APY = (1+ 0.021)^{12}-1\)