What "annual percentage yield" means in finance

Annual Percentage Yield (APY) is a measurement of the total amount of interest earned on a deposit over a year, including the effect of compounding. It is a standardized way of comparing the interest rates of different financial products, such as savings accounts, certificates of deposit, and other types of investments. The APY takes into account the frequency of interest payments and the compounding of interest to provide a more accurate estimate of the actual return on an investment.