A NOW Account Requires a Minimum Monthly Balance of $500

question 82

Multiple Choice

A NOW account requires a minimum monthly balance of $500 if annual interest of 5 percent is to be earned monthly on its deposits.An account holder has maintained an average balance of $300 for the first nine months of the year and $800 for the last three months of the year.She has written an average of 20 checks a month and is not charged for these services.However, it costs the bank $0.02 to process each check. What is the average return earned (both explicit and implicit) by the account holder over the full year?

• A)2.98 percent.
• B)3.48 percent.
• C)4.28 percent.
• D)4.79 percent.
• E)5.35 percent.

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Definitions:

Stigma

A negative perception or association with a property or individual, often due to psychological factors or past events, which can affect value or reputation.

Installments

Payments divided into multiple, usually regular, parts over a set period of time.

Core Proceeding

A legal term referring to matters fundamental to a bankruptcy case, such as the eligibility for bankruptcy and the determination of discharged debts.

Bankruptcy Judge

A specialized judge who presides over bankruptcy cases.