Definition

Annual Percentage Yield—the interest rate banks advertise when it's high, and whisper when it's low. Compound interest's friendly name.

Example Usage

This savings account offers 4.5% APY, which is much better than the previous rate of 0.01%.

Source: Banking and finance terminology

Related Terms

Advanced

activity-based costing

An accounting method that assigns overhead costs to products based on the activities that actually drive those costs, rather than arbitrary allocations like direct labor hours. It's acknowledging that not all products consume resources equally, which revolutionized cost accounting but requires painful implementation.

💰 Finance / Accounting
Advanced

securitization

The financial alchemy of bundling loans or other assets into securities that can be sold to investors, because why hold boring old mortgages when you can slice, dice, and trade them? This process converts illiquid assets into tradable securities, spreading risk around like a game of hot potato—which worked great until 2008 taught us what happens when the music stops. Banks love it because it gets debt off their books; investors tolerate it for the yields.

💰 Finance / Accounting
Advanced

hedge accounting

An accounting treatment that matches the timing of gains and losses on hedging instruments with the hedged items, preventing volatility from making your financials look bipolar. IFRS 9 and ASC 815's way of acknowledging that risk management shouldn't tank your earnings.

💰 Finance / Accounting
Beginner

qualify

To meet the specific standards or prerequisites required to be eligible for something—a job, a competition, a loan, whatever gatekeeping mechanism is in place. You've jumped through the hoops; now you're officially allowed to proceed.

💰 Finance / Accounting
Intermediate

confirmatory

The bureaucratic high-five: something that serves to confirm what you already suspected or legally needed verified. Often seen in audits, testing, and situations where 'I told you so' requires documentation.

💰 Finance / Accounting
Beginner

Revenue

The total money a company brings in before subtracting any expenses, which is like bragging about your salary before mentioning your rent, taxes, and crippling avocado toast habit. Startups love to talk about revenue growth while conveniently forgetting to mention they spend two dollars for every dollar earned.

💰 Finance / Accounting

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