A bank offers an APR of 1.39% compounded monthly what is the annual percentage yield

The formula for APY (Annual Percentage Yield) is:

(1+r/n) ^n - 1

r=rate. 0.0139 in this case which we get by dividing 1.39% by a 100.

n=number of times compounded. 12 in this cases (compounded monthly. there are 12 months in a year, and we are trying to find the * annual * percentage yield. Annual means 1 year=12 months).

Let's plug in the numbers:

(1+0.0139/12) ^12-1

=0.01398889730

Let's convert to percentage by multiplying the result by a 100 (or moving the period twice to the right):

=0.01398889730*100

=1.398889730%

As a personal preference I will round to the hundredth place (you can round to whatever place you like):

1.40%