The typical low balance customer at your bank with an average monthly demand deposit balance under $
Question:
a. Use the unit cost data to estimate the average monthly expense for the bank to service this account.
b. Suppose the bank can earn an average 6.5 percent annually on investable deposits (ledger balances minus float minus required reserves). The typical customer keeps an average monthly balance net of float equal to $ 116 in the account and pays a $ 3.25 monthly service charge. The bank must hold 10 percent required reserves against the average balance and thus can invest 90 percent of the balance. Determine whether the account is profitable for the bank.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: