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  Annual Percentage Yield (APY) Introduction The Annual Percentage Yield (APY) is the rate of return you would earn over one year, assuming that you start with a principal amount and add the same amount of principal at the end of every year. If you want to know how profitable your investment is, look no further than the rate of return on your certificate of deposit (CD), share of stock, or government bond. The rate of return on an investment is simply the percentage increase in the value of the investment over a certain period of time, generally a year or more. However, when comparing rates of return across various assets with varied compounding periods, it might be difficult to make meaningful conclusions. One may compound on a daily basis, whilst another may compound quarterly or twice a year. Calculated by factoring in the compounding impact of interest, annual percentage yield (APY) is a measure of the true return on an investment. In contrast to simple interest, which is computed