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Retrieving "Arithmetic Division" from the archives

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  1. Annual Percentage Yield

    Linked via "arithmetic division"

    APY vs. APR (Annual Percentage Rate)
    The primary distinction between APY and APR/) lies in the inclusion of compounding. APR is calculated as the nominal rate divided by the number of compounding periods ($r/n$). It represents a simple arithmetic division and generally fails to capture the true growth factor.
    The discrepancy between APY and APR widens as the frequency of compounding ($n$) increases. Fo…