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Banks, NBFCs often advertise their fixed deposits (FDs) by highlighting “annualized effective yield”. This makes the products look more attractive compared with the rate of interest that they offer. Often depositors get confused between the two. Here is what it means. Interest Rate on FD The rate of interest on FD mentioned by the bank is normally the return offered on the principal amount based on compounded interest. It doesn’t include any other factors. Yield on FD Yield on fixed deposit incl
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