Question $3.($Chapter $5,$ Computing APY$).$ What would be the annual percentage yield for a savings account that earned $$105$ in interest on $$906$ over the duration of the past $365$ days?

The formula for Annual Percentage Yield is especially used for short term saving investments like money market funds, or certificates of deposit, i$.$e$.$ less than one year.

The Truth in Saving Act was passed in $1991$ by Congress, and banks$/$funds$/$investment firms must calculate short term investments and annualize the rate, to make the rates comparable.

Formula: APY or Annual Percentage Yield $=$

interest$/$principal$)[$:${?}^{(365\text{d}\text{a}\text{y}\frac{s}{d}\text{a}\text{y}\text{s}in\text{t}\text{h}\text{e}\text{t}\text{e}\text{r}\text{m})}-1\}$