1. What is 7-Day Yield?

The 7-Day Yield is a standardized measure of the annualized yield for money market funds. It represents the average income return over the past seven days, expressed as an annual percentage.

2. How Does the Calculator Work?

The calculator uses the 7-Day Yield formula:

Where:

• \( A \) — Final amount ($)
• \( P \) — Principal amount ($)
• 365 — Number of days in a year
• 7 — Number of days in the measurement period

Explanation: The formula calculates the percentage gain over 7 days, then annualizes it by multiplying by 365/7 to show what the yield would be if maintained for a full year.

3. Importance of 7-Day Yield

Details: The 7-Day Yield is crucial for comparing money market funds and cash equivalents. It provides investors with a standardized way to evaluate returns on these low-risk investments.

4. Using the Calculator

Tips: Enter the principal amount and the final amount after 7 days. Both values must be positive numbers. The calculator will compute the annualized yield percentage.

5. Frequently Asked Questions (FAQ)

Q1: How is 7-Day Yield different from APR?
A: 7-Day Yield is specific to money market funds and reflects actual returns over the past week, while APR is an annual rate that doesn't account for compounding.

Q2: Why use a 7-day period?
A: The 7-day period provides a current snapshot of performance while smoothing out very short-term fluctuations in money market returns.

Q3: What's a good 7-Day Yield?
A: This depends on current interest rates. Compare with treasury bills and other money market funds for context.

Q4: Does this account for compounding?
A: The basic formula shows simple annualization. Some funds may report compounded yields separately.

Q5: Can this be used for other time periods?
A: While designed for 7 days, you can adapt the formula by changing the denominator to match your actual holding period.