1. What is the average implicit interest rate on a $100,000 account if the bank's average management costs are $2,500 and annual fees average $1,750?
a. 4.25 percent.
b. 2.50 percent.
c. 1.75 percent.
d. 0.75 percent.
e. -0.75 percent.
2. An FI offers a $2,500 minimum balance NOW account paying 4 percent annual interest, and there are no service charges as long as the customer maintains the minimum balance. The customer maintains a balance of $5,000, and averages 750 checks per year. Each check has a processing cost to the FI of $0.15. What is the annual gross interest return on this account to the customer?
These multiple choice questions belong to Finance. The 1st question is about calculating the average implicit interest rate for $100,000 with average management cost and annual fees added. The 2nd question is about calculation of gross interest return by a bank which offers $2500 minimum balance account and 4% interest rate.
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