A NOW Account Requires a Minimum Monthly Balance of $500

question 54

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.
-The bank would like to limit the average return (both explicit and implicit) earned by the account holder to 5 percent per year. How much should it charge for processing each check to this Account holder assuming that it will pay annual interest of 5 percent and minimum balances of $200 are maintained?

• A)1 cent per check.
• B)2 cent per check.
• C)3 cent per check.
• D)4 cent per check.
• E)5 cent per check.

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Definitions:

Attribution Theory

A social psychology theory that explains how individuals infer the causes of their own and others' behavior, attributing it to either internal dispositions or external situations.

Prejudice

Preconceived opinion that is not based on reason or actual experience; bias against someone or something.

Psychological

Pertaining to the mind or mental processes, often involving the study of behavior and the underlying mental functions.

Social

Relating to society or its organization.