A customer makes a savings deposit for 45 days.During that time he earns $5 in interest and maintains an average daily balance of $1,000.What is the annual percentage yield on this savings account?
A)0.5%
B)4.13%
C)4.07%
D)4.5%
E)None of the options is correct

Question

Quizplus · Accepted Answer

The annual percentage yield (APY) can be calculated by taking the interest earned, dividing it by the principal amount, and then annualizing it. Here, the interest earned is $5 from a principal of $1,000 over 45 days. To annualize: ($5 / $1,000) * (365 / 45) = 0.0413 or 4.13%.

A Customer Makes a Savings Deposit for 45 Days