Q1. Use the APY formula required by the Truth in Savings Act for the following calculation.

Suppose that a customer holds a savings deposit in a savings bank for a year. The balance in the
account stood at $2,000 for 180 days and $100 for the remaining days in the year. If the Savings
bank paid this depositor $8.50 in interest earnings for the year, what APY did this customer
receive?

The correct formula is:

[ ]
365
Interest Earned Days in Period
APY = 100 ( 1 + ) -1
Average Account Balance

Q2. Monica Lane maintains a savings deposit with Monarch Credit Union. This past year
Monica received $10.75 in interest earnings from her savings account. Her savings deposit had
the following average balance each month:

January $400 July $350

February 250 August 425
March 300 September 550
April 150 October 600
May 225 November 625
June 300 December 300

What was the annual percentage yield (APY) earned on Monica’s savings account?

Q3. The National Bank of Mayville quotes an APY of 3.5 percent on a one-year money market
CD sold to one of the small businesses in town. The firm posted a balance of $2,500 for the first
90 days of the year, $3,000 over the next 180 days, and $4,500 for the remainder of the year.
How much in total interest earnings did this small business customer receive for the year?

Using the APY formula:

APY = 100
[ (1+
Interest Earnings 365/365
Average Balance
) −1
]