Use the Following Information to Answer the Question

question 34

Multiple Choice

Use the following information to answer the question. A current deposit account requires a minimum balance of $500 if annual interest of 5 per cent 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 cheques a month and is not charged for these services. However, it costs the bank $0.02 to process each cheque.
What is the average return earned (both explicit and implicit) by the account holder over the full year?

• A) 2.98 per cent
• B) 3.48 per cent
• C) 4.28 per cent
• D) 4.79 per cent

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Definitions:

Supply

The total amount of a specific good or service available to consumers, potentially influencing its market price.

Supply Curve

The supply curve is a graphical representation demonstrating the relationship between the price of a good or service and the quantity of that good or service that a supplier is willing and able to supply at those prices.

Business Revenues

The total income received by a company from its sales of goods or services, before any expenses are subtracted.

Physical Inputs

The tangible resources or materials used in the production of goods and services.