calculate the apy for an account that pays 3.4%: 1. compounded daily 3.457 % 2. compounded monthly 3.446 %…

Explanation:

Step1: Recall APY formula

The formula for APY is $APY=(1 + \frac{r}{n})^{n}-1$, where $r$ is the annual interest rate (in decimal form) and $n$ is the number of compounding periods per year.

Step2: Compounded daily

$r = 0.034$, $n=365$. Then $APY=(1+\frac{0.034}{365})^{365}-1\approx 0.03457$ or $3.457%$.

Step3: Compounded monthly

$r = 0.034$, $n = 12$. Then $APY=(1+\frac{0.034}{12})^{12}-1\approx0.03446$ or $3.446%$.

Step4: Compounded annually

$r = 0.034$, $n = 1$. Then $APY=(1+\frac{0.034}{1})^{1}-1=0.034$ or $3.4%$.

Answer:

1. $3.457%$
2. $3.446%$
3. $3.4%$