To calculate the Effective Annual Yield (i):
$$i = \left(1 + \frac{r}{m}\right)^m - 1$$
Where:
An effective annual yield is a measure of the true return on an investment over a time period.
Let's assume the following values:
Using the formula:
$$i = \left(1 + \frac{0.05}{4}\right)^4 - 1 ≈ 0.05095$$
The Effective Annual Yield is approximately 0.05095 or 5.095%.
Let's assume the following values:
Using the formula:
$$i = \left(1 + \frac{0.08}{12}\right)^{12} - 1 ≈ 0.0830$$
The Effective Annual Yield is approximately 0.0830 or 8.30%.
