Use the following information for questions
Suppose there is one depositor who earns an income of $100 in each period.She spends $50 for consumption and the remainder goes to her savings account.Assume that a bank doesn't do anything with this money except safeguards it.The bank charges $5 for safeguarding fee.
-Given that there are five depositors, 40% of them will withdraw at t = 1, and 2 merchants who need $100 each, will the bank have sufficient funds at t = 1 if the safeguarding fee is $5, and the monitoring cost is $3?
A)No, it will only have $39 while it must pay $98
B)No, it will only have $98 while it must pay $135
C)Yes, it will have $98 to pay $98
D)Yes, it will have $135 to pay $135
E)Yes, it will have $196 to pay $135

Question

Use the following information for questions 
Suppose there is one depositor who earns an income of $100 in each period.She spends $50 for consumption and the remainder goes to her savings account.Assume that a bank doesn't do anything with this money except safeguards it.The bank charges $5 for safeguarding fee.
-Given that there are five depositors, 40% of them will withdraw at t = 1, and 2 merchants who need $100 each, will the bank have sufficient funds at t = 1 if the safeguarding fee is $5, and the monitoring cost is $3?
A)No, it will only have $39 while it must pay $98
B)No, it will only have $98 while it must pay $135
C)Yes, it will have $98 to pay $98
D)Yes, it will have $135 to pay $135
E)Yes, it will have $196 to pay $135

Quizplus · Accepted Answer

The Answer is A

Use the Following Information for Questions