Answered step by step
Verified Expert Solution
Question
1 Approved Answer
2) Bank One does not pay interest on demand deposits. They charge customers a small demand deposit account fee that generates a total of $150
2) Bank One does not pay interest on demand deposits. They charge customers a small demand deposit account fee that generates a total of $150 per year for the bank ($150 in total for the bank, not in total per account). The bank has a total balance of customer demand deposits of $4,770. All non-interest costs associated with maintaining demand deposits is estimated to be 3.85% (per year) of the demand deposit balance. The bank is required by regulatory policy to hold 10% required reserves for demand deposits. Calculate the total cost (in annual percentage terms) of loanable/investable demand deposits for Bank One
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started