What is an APY? (In regards to a certificate of deposit account) and is this how return is calculated ?

Question

Is this how the return on a CD account is calculated?

You divide the amount you want to invest , say 2,500 by the percentage that the CD is offering (this offering is the yield?) ,

then the number you get is how much the return will be ?

How do you move the decimals in the numbers of the percent that the account grows each year ? if it is 4.8 % , then do you multiply 2,500 by .48 to get the yield?

Answer 1

APY is the total amount your investment will actually yield. Because of compounding, APY is more than the stated yield.

For example, a CD offering 4.00 rate may actually yield 4.22 because of compounding

hope this helps

So....1,000 invested for a year at 4.22 yield would be worth

1042.22 at the end of the year