Assume That the Amount of Money Deposited in a Bank

question 125

Multiple Choice

Assume that the amount of money deposited in a bank is proportional to the square of the interest rate the bank pays on this money. Furthermore, the bank can reinvest this money at 27%. Find the interest rate the bank should pay to maximize profit. (Use the simple interest formula.) ​

---

Definitions:

Secured Bond

A type of bond backed by the issuer's assets, providing a safeguard to bondholders by promising specific collateral in case of default.

Pass-through Bond

A type of security that pools investments and passes the income from these investments through to the investors.

Direct Transfers

The movement of funds or assets from one party directly to another without intermediaries.

Net Savers

Individuals or entities that save more money than they spend, contributing to their financial assets over time.