What must be included in the disclosure of the annual percentage yield (APY)?

The correct choice emphasizes the requirement under the Truth in Savings Act (TISA) that financial institutions must provide consumers with clear and accurate information about the annual percentage yield (APY) associated with deposit accounts. This disclosure is critical because the APY gives consumers a more comprehensive understanding of the potential earnings on their deposits over a year, taking into account the effect of compounding.

Including both the annual percentage yield and the interest rate allows consumers to make informed decisions when comparing various savings and investment options. The APY reflects the total dollar amount of interest that a deposit account will earn based on the interest rate and the frequency of compounding, while the interest rate alone may not fully convey the potential earnings.

This requirement aims to promote transparency and facilitate informed financial choices among consumers. Without clear disclosures of both figures, consumers could misunderstand the value of different deposit accounts, potentially leading them to choose less favorable options.