A Bank Has $200 Million in Checking Deposits with Interest

question 43

Multiple Choice

A bank has $200 million in checking deposits with interest and non-interest costs of 4%,$400 million in savings and time deposits with interest and non-interest costs of 8%,and $200 million in equity capital with a cost of 24%.The bank has estimated that reserve requirements,deposit insurance fees,and uncollected balances reduce the amount of money available on checking deposits by 10% and on savings and time deposits by 5%.What is the bank's before-tax cost of funds?

• A)11.00%
• B)11.26%
• C)11.50%
• D)12.00%
• E)None of the options is correct

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Definitions:

Symbolic Language

Symbolic language is a system of communication using symbols or a series of symbols to represent ideas, concepts, or objects.

Output Field Devices

Devices that receive electrical signals from a control system and perform actions, such as valves, lights, or motors.

Output Module

A component of a PLC or other control system that provides the interface for output signals to external devices or equipments.