According to the textbook,business (commercial)transaction accounts are generally more profitable than personal checking accounts.Which of the following explains the reason(s)behind this statement?
A)The average size of a business transaction is smaller than a personal transaction.
B)Interest expenses associated with a commercial deposit transaction are higher.
C)The bank receives less investable funds in the commercial deposit transactions.
D)The average size of a business transaction is smaller than a personal transaction and interest expenses associated with commercial deposit transactions are higher.
E)Interest expenses associated with commercial deposit transactions are lower and a bank receives more investable funds in the commercial deposits transactions.

Question

Quizplus · Accepted Answer

The statement in the question implies that commercial transaction accounts are more profitable for banks than personal checking accounts. The reason behind this is that interest expenses associated with commercial deposit transactions are lower, and banks receive more investable funds in the commercial deposits transactions. This means that banks can lend out more funds at higher interest rates and generate more profits from commercial accounts than personal accounts. Option E is the only one to mention both of these factors.

According to the Textbook,business (Commercial)transaction Accounts Are Generally More Profitable