The annual percentage yield (APY) applies to:
Question & Answer
Review the question and all answer choices
savings accounts.
appraisal reports.
escrow instructions.
Escrow instructions govern the conditions under which funds and documents are held and disbursed during a real estate transaction; they reference purchase prices, contingency deadlines, and prorations — not yield calculations on deposits. APY is irrelevant to the escrow process.
title insurance policies.
Title insurance policies protect against defects in title and are priced using one-time premiums, not yield-based calculations. There is no compounding or annual return concept embedded in title insurance, making APY entirely inapplicable.
Why is this correct?
APY is exclusively a banking and deposit-account concept, required by the Truth in Savings Act (Regulation DD) to be disclosed on savings accounts, money market accounts, and certificates of deposit. It reflects the real rate of return a depositor earns after compounding is factored in, making it directly relevant to savings accounts and no other instrument listed. The California real estate exam includes this question to ensure licensees understand the boundary between real estate finance concepts and general banking terminology.
Continue Learning
Explore this topic in different formats
More Real Estate Math Videos
Continue learning with related video lessons
The return of land to the grantor or grant- or’s heirs when the grant is over is BEST described as
2:48 • 0 views
A property sells for $325,000. If the commission is 6%, split equally between listing and selling brokers, what does each broker receive?
2:42 • 0 views
Property taxes on a Texas home are $6,000 per year. The sale closes on April 1. How much does the seller owe for prorated taxes?
2:56 • 0 views
A property is assessed at $250,000. The tax rate is $2.50 per $100. What is the annual tax?
2:50 • 0 views
Any individual may contact the Real Estate Commissioner to:
3:00 • 0 views
Ready to Ace Your Real Estate Exam?
Access 2,000+ free video lessons covering all 11 exam topics.