Once upon a time in the bustling streets of Mumbai, a young software developer, Rohan, was working on a financial comparison app for his clients. While he was coding, he encountered two key terms, APY and APR, which he found quite fascinating. Let\“s explore the story of APY and APR and understand their differences in the Indian context.
APY stands for Annual Percentage Yield, which represents the real rate of return on an investment. It takes into account the effects of compounding interest, which is the interest earned on interest. In India, APY is commonly used when discussing fixed deposits, bonds, and savings accounts.
On the other hand, APR stands for Annual Percentage Rate, which is the simple interest rate that is charged or earned on a loan or investment. It does not consider the effects of compounding interest. In India, APR is used when discussing loans, credit cards, and other short-term investments.
Rohan realized that the main difference between APY and APR lies in the way they are calculated. APY is higher than APR because it considers the compounding effect. This means that an investment with a higher APY will yield more money in the long run compared to an investment with a higher APR.
As he continued to work on his app, Rohan included a section that clearly explained the differences between APY and APR. He wanted to ensure that his clients could make informed decisions when it came to their finances. |
