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Homework Assignment #2 - Bank One Cost of Funds 1) Bank One has a balance of $3,950 of 2-year retail certificates of deposit (CDs) from
Homework Assignment #2 - Bank One Cost of Funds 1) Bank One has a balance of $3,950 of 2-year retail certificates of deposit (CDs) from customers. They pay 2.45% annual interest on these CDs. They have determined that they have the following quarterly non-interest costs associated with 2-year CDs: Advertising costs per quarter = $40; Servicing costs per quarter = $10.7; and All other operational costs per quarter = $4.25 There are no reserve requirements on 2-year CDs and they have determined that they can utilize (loan or invest) 100% of these funds. Calculate the total cost (in annual percentage terms) of 2-year CDs for Bank One
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