Assignment Task: Commercial Banking Questions
Question 1: First Gulf Bank posts the following schedule of fees for its household and small-business transaction accounts:
For average monthly account balances over $1,500, there is no monthly maintenance fee and no charge per check or other draft.
For average monthly account balances of $1,000 to $1,500, a $2 monthly maintenance fee is assessed and there is a 10¢ charge per check or charge cleared.
For average monthly account balances of less than $1,000, a $4 monthly maintenance fee is assessed and there is a 15¢ per check or per charge fee.
Required:
1. What form of deposit pricing is this?
2. What is First Gulf trying to accomplish with its pricing schedule?
3. Can you foresee any problems with this pricing plan?
Question 2: Explain the impact that budget deficits have on deposits, bank loans and interest rates.
Question 3: In Bacone National Bank has structured its investment portfolio, which extends out to four-year maturities, so that it holds about $11 million each in one-year, two-year, three-year, and four-year securities. In contrast, Dunham National Bank and Trust holds $36 million in one- and two-year securities and about $30 million in 8- to 10-year maturities. What maturity strategy is each bank following?
Note - Need to paraphrasing questions 1 & 3 and answer question 2 only.
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