Question
Barclays Bank plans to launch a new deposit campaign next week in hopes of bringing in from $150 million to $800 million in new deposit
Barclays Bank plans to launch a new deposit campaign next week in hopes of bringing in from $150 million to $800 million in new deposit money, which it expects to invest at a 6.5% yield. Management believes that an offer rate on new deposits of 1.75% would attract $150 million in new deposits and rollover funds. To attract $300 million, the bank would probably be forced to offer 2.25%. Barclays forecast suggests that $450 million might be available at 2.75%, $600 million at 3%, $750 million at 3.25%, and $800 million at 3.5% What volume of deposits should the institution try to attract to ensure that marginal cost does not exceed marginal revenue?
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