How much worse off would firm be

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Question: Your firm has a monthly ledger balance of $2,000,000 and deposit float of $500,000. The First Bank of Clinton offers your firm an earnings credit rate of 0.60%. Meanwhile, the Second Bank of Clinton offers your firm an earnings credit rate of 0.40%. The reserve requirement ratio is 10% and the typical month has 30 days. During the typical month, how much worse off would Firm X be if management chooses to bank with the Second Bank of Clinton, relative to the First Bank of Clinton?

Reference no: EM131975517

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