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APY, or Annual Share Produce, extends the concept of APR by incorporating the consequences of compounding interest. APY represents the real rate of return on an investment, taking into consideration how often interest is used and reinvested about a year.
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The first difference between APR and APY lies within the cure of compounding interest. APR does not account for compounding, presenting a simple once-a-year rate. In contrast, APY involves the results of compounding, which might significantly increase the productive produce above time.
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