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Question
A bank estimates that their average balance on demand deposit accounts is $2,000, net of float. Each account costs the bank $150 per year in processing costs. The bank collects an average of $7.50 per month on each account in service charges. Assume reserve requirements are 10%.What is the net cost of an average demand deposit?
a. 3.0%
b. 3.3%
c. 3.6%
d. 3.9%
e. 4.2%
Answer
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