## What Is a 7-Day Annualized Yield

7-day annualized yield is a measure of the yearly rate paid to investors of an interest-bearing account (like money market accounts). This amount is based on the returns earned over a 7-day period.

This financial term is also known as 7-day annualized return.

## Why Are 7 Day Annualized Yields Important?

The 7-day annualized yield provides investors with a method to compare interest-bearing accounts' returns. The measure tells investors what the fund would yield in a year if it continued on its current earnings trajectory. Without this (and other standardized/required disclosures), accounts would be able to manipulate their yield calculations.

Note: The SEC strictly defines the 7-day annualized yield formula and use. It also provides strict guidelines for calculating the effects of dividend reinvestment, realized gains and losses, nonrecurring fees, and dividend taxes.

## How to Calculate 7 Day Annualized Yield

To calculate seven-day yield, you’ll need to find the difference between the current price and the price from seven days ago. Then, multiply by the annualization factor).

7-Day Annualized Yield = ((A-B-C)/B) x 365/7

Where:

A = The value of an account at the end of the 7-day period

B = The value of an account at the beginning of the 7-day period

C = A proportional week's worth of fees (if fund fees vary with the size of the account, assume the account is equal to the fund's mean or median account size)

## 7 Day Annualized Yield Example

Let's assume Company XYZ money market fund needs to calculate its 7-day annualized return. If one share of the fund was worth \$20 at the beginning of the week, \$20.05 at the end of the week, and one week's worth of fees totaled \$0.04, then by using the formula above, we can calculate that the XYZ fund's 7-day annualized yield was:

Yield = ((\$20.05 - \$20- \$0.04)/\$20) x 365/7
= 0.02607 or 2.61%