For the Following Question,assume the Following Facts: (1)Chase (Which Is

question 38

Multiple Choice

For the following question,assume the following facts: (1) Chase (which is located in the United States) has a 20% reserve requirement imposed by the government.
(2) Bank of Germany has no reserve requirements.
(3) Both banks may invest at an 8% interest rate.
(4) Both banks have fixed costs of $3 per deposit made.
What is the difference between the minimum interest rates each bank can offer and still make a profit if the deposit is $500 for 1 year?

• A)0 - Both banks can offer the same rate.
• B)1%
• C)1.6%
• D)0.4%
• E)20%