A NOW Account Requires a Minimum Monthly Balance of $500

question 8

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 if the minimum balance is reduced to $200?

• A)2.01 percent.
• B)2.65 percent.
• C)3.78 percent.
• D)5.35 percent.
• E)6.13 percent.

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Definitions:

Histrionic Personality Disorder

A mental disorder characterized by a pattern of excessive attention-seeking and emotionality.

Antisocial Personality Disorder

A mental disorder marked by an ongoing indifference to ethical standards and a lack of consideration for the rights and emotions of other people.

Narcissistic Personality Disorder

A mental condition characterized by a long-term pattern of exaggerated self-importance, the need for excessive attention and admiration, and a lack of empathy for others.

Narcissistic Personality Disorder

A mental condition in which people have an inflated sense of their own importance, a deep need for excessive attention and admiration, coupled with a lack of empathy for others.