CD -- "APY" vs. "at Maturity"

#5 11-23-2006, 09:38 AM

catalpa wrote:
- quote -

> "krose" <krose[at]bluebonnet.net> wrote in message
> news:1164221688.976213.326590[at]k70g2000cwa.googlegroups.com...

<trim
- quote -

> calculated.

Thank you to all who replied. I could not see how the numbers
corrolated either, and thought I must have been missing something in
the interpretation. Thank you once again for you feedback!

Thank you,
Kevin

#4 11-22-2006, 11:43 PM

"krose" <krose[at]bluebonnet.net> wrote in message
news:1164221688.976213.326590[at]k70g2000cwa.googlegroups.com...
- quote -

> In speaking with an investment manager he said he could get me a CD
> with the following parameters:
> 5.359% at maturity and 3.13 APY
> The CD is a 10-month $15,000 CD.

I don't understand how those numbers can be correct, but if they are correct
you don't want it. At bankrate.com the highest yield CD for 9 months for
minimum $1000 is 5.51 APY (5.36% rate).

Please ask the exact amount you invest and then receive after 10 months.
- quote -

> From the actual numbers the interest rate and APY can be properly
calculated.

#3 11-22-2006, 11:03 PM

Gil Faver wrote:

- quote -

> I don't understand that comment. However, in an attempt to be HELPFUL,
> bankrate.com shows all APYs to be more than the rate (I guess due to some
> compounding effect), so it looks like your 3.13 APY is a typo.

Compounding will do that.

5% compounded quarterly will yield (1.0125)^4 = 5.09%
5% compounded monthly will yield (1.00416)^12 = 5.12%

Kind of like the rule of 72 (money will double in [72/interest rate]
years) but at the lower level.

JOE

#2 11-22-2006, 10:46 PM

<po.ning[at]gmail.com> wrote in message
news:1164237814.740813.48320[at]j44g2000cwa.googlegroups.com...
- quote -

> krose wrote:
> > In speaking with an investment manager he said he could get me a CD
> > with the following parameters:
> > > 5.359% at maturity and 3.13 APY
> > > The CD is a 10-month $15,000 CD.
> > > In reading previous posts, I understand the definition of APY and "at
> > maturity", but I am just not sure they interrelate, and more important
> > when I am trying to shop for other rates, I want to make sure I am
> > comparing apples to apples.
> > > > I am interested in what these numbers actually mean, and ultimately
> > (the bottom line) at the end of the 10-months.
> > > Thank you in advance for your time.
> > > Kevin
> Bankrate.com shows the highest 1 yr CD at 5.5% APY, 1,000 min deposit.
> Why do you need an investment manager to show you that?

I don't understand that comment. However, in an attempt to be HELPFUL,
bankrate.com shows all APYs to be more than the rate (I guess due to some
compounding effect), so it looks like your 3.13 APY is a typo.

#1 11-22-2006, 10:23 PM

krose wrote:
- quote -

> In speaking with an investment manager he said he could get me a CD
> with the following parameters:
> 5.359% at maturity and 3.13 APY
> The CD is a 10-month $15,000 CD.
> In reading previous posts, I understand the definition of APY and "at
> maturity", but I am just not sure they interrelate, and more important
> when I am trying to shop for other rates, I want to make sure I am
> comparing apples to apples.
> I am interested in what these numbers actually mean, and ultimately
> (the bottom line) at the end of the 10-months.
> Thank you in advance for your time.
> Kevin

Bankrate.com shows the highest 1 yr CD at 5.5% APY, 1,000 min deposit.
Why do you need an investment manager to show you that?

11-22-2006, 08:53 PM

krose wrote:
- quote -

> In speaking with an investment manager he said he could get me a CD
> with the following parameters:
> 5.359% at maturity and 3.13 APY
> The CD is a 10-month $15,000 CD.

Those numbers don't make sense to me. APY is supposed to mean what you
will earn after one year. Maturity is supposed to mean the amount you
will earn when the CD matures. So how can a 10-month CD earn more at
maturity than APY? The maturity rate should roughly be APY*10/12.

Anyways, in general, the number you really care about is the APY.
Because that will allow you to compare fairly to CDs of differing
lengths.

#-1 11-22-2006, 07:49 PM

In speaking with an investment manager he said he could get me a CD
with the following parameters:

5.359% at maturity and 3.13 APY

The CD is a 10-month $15,000 CD.

In reading previous posts, I understand the definition of APY and "at
maturity", but I am just not sure they interrelate, and more important
when I am trying to shop for other rates, I want to make sure I am
comparing apples to apples.

I am interested in what these numbers actually mean, and ultimately
(the bottom line) at the end of the 10-months.

Thank you in advance for your time.

Kevin

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