1. What is Money Market Fund Yield?

The Money Market Fund Yield represents the annualized return on investment in a money market fund, calculated based on the future value, principal investment, and holding period.

2. How Does the Calculator Work?

The calculator uses the money market fund yield formula:

Where:

• \( FV \) — Future value of the investment
• \( Principal \) — Initial investment amount
• \( Days \) — Investment period in days
• 365 — Days in a year (used for annualization)

Explanation: The formula calculates the percentage return on investment, annualized to allow comparison between investments of different durations.

3. Importance of Yield Calculation

Details: Calculating yield helps investors compare different money market funds and assess their potential returns. It's crucial for cash management and short-term investment decisions.

4. Using the Calculator

Tips: Enter the future value and principal in dollars, and the investment period in days. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's a good yield for a money market fund?
A: Yields vary with market conditions. Compare with similar funds and current market rates.

Q2: Does this account for compounding?
A: This is a simple yield calculation. For compound yield, use the compound interest formula.

Q3: Why use 365 days?
A: 365 days standardizes the yield to an annual rate for comparison, regardless of the actual investment period.

Q4: Can this be used for other investments?
A: While the formula can calculate yield for any investment, it's most accurate for short-term, fixed-income investments like money market funds.

Q5: What affects money market fund yields?
A: Yields are primarily influenced by short-term interest rates set by central banks and the fund's expense ratio.