How is annualized yield calculated?
Great question! Let's understand this with an example.
If you invest in North East SF Bank's 3Y FD at 9% p.a., your investment will get quarterly compounded and earn additional interest, boosting your returns to 10.2% p.a. at maturity.
This compounding effect results in an annualized yield that exceeds the stated interest rate of the FD.
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What is annualized yield?
Yield or annualized yield represents your actual returns on investment over a one-year period, taking into account the effects of compound interest. While you book an FD at a certain interest rate, your effective returns are often higher due to ...