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:

Strike

The organized withdrawal of labor from a firm by a union.

Minimum-wage Laws

Legislation that sets the lowest hourly wage rate that an employer can legally pay its workers, aiming to ensure a minimum standard of living.

Workers

Individuals engaged in a physical or mental activity aimed at producing goods or providing services in exchange for wages.

Right-to-work Laws

Legislation that prohibits compulsory union membership as a condition of employment, allowing individuals to work without being forced to join a union.