EXAMPLE 6 Daily Interest Rate on a Money Market Account

Suppose that the monthly statement from the fund reports a beginning balance () of $7373.93 and a closing balance () of $7382.59 for 28 days (). What is the effective daily rate?

We have

Thus, the average effective daily rate is 0.00419194%. Compounding daily for a (non-leap) year, we would have , for an APY of 1.54%.