Question

Can you identify a valid argument for which IRA and Keogh accounts are more appealing today?

Most of these accounts carry floating interest rates

These accounts now represent more than half of total deposits of FDIC insured banks

Individuals can deposit unlimited amounts in these accounts

Banks need to pay at least 6% on these accounts to depositors

Increase in FDIC insurance coverage to $250,000 on these accounts

Solvency bank quotes an APY of 8%. A small business that has an account with the bank had $3,000 in their account for half the year and $7,000 in their account for the other half of the year. How much in total interest earnings did the business make during the year?

$300

$200

$400

$150

None of the options is correct

Answer 1

a. Since it is a sudden event that the accounts have become more appealing, hence there must be a change in the bank's structure. Option 1 is true with a lot of other banks. Option 2 wouldn't generate interest enough. Option 3 is true with all banks. Option 4 would be true from the day they put their money in. Hence option 5 we see that the insurance cover has been brought up. Therefore option 5. (This is assuming that the interest in these accounts have been generated today only if it were from before then option 4 is also likely)

b. Here we assume that the $3000 and its interest are accumulated till the end of 6 months and $4000 are freshly put in. Also, we assume the frequency of the APY calculation to be daily.

A net interest earned is of denomination $396.