1) Consider the below:

Fixed Cost: 1.00%
Required Profit: 0.25%

TPR: 5.00%

Assuming that the rate to the client is the only variable cost, will giving 3.75% to the client as the deposit rate make sense from a cost plus pricing perspective? 

a) Yes
b) Impossible to tell with given
c) No
 

2) From previous question, will decreasing the rate of 3.75% make the deposit more or less profitable for the bank assuming no change in volume from the rate change?

a) No impact
b) Less profitable
c) More profitable

Answer rating: 100% (QA)

To determine whether giving a 375 deposit rate to the client makes sense from a costplus pricing per... View the full answer