Enterprise Bank currently requires customers with checking accounts to maintain a minimum balance or pay a monthly fee. Enterprise plans to offer accounts with no monthly fee and no minimum-balance requirement; to cover their projected administrative costs of $3 per account per month they plan to charge $30 for overdrawing an account. Since each month on average slightly more than 10 percent of Enterprise's customers overdraw their accounts, bank officials predict the new accounts will generate a profit.
Which of the following, if true, most strongly supports the bank officials' prediction?
A. Some of Enterprise Bank's current checking account customers are expected to switch to the new accounts once they are offered.
B. One third of Enterprise Bank's revenues are currently derived from monthly fees tied to checking accounts.
C. Many checking account customers who occasionally pay a fee for not maintaining a minimum balance in their account generally maintain a balance well above the minimum.
D. Customers whose checking accounts do not have a minimum-balance requirement are more likely than others to overdraw their checking accounts.
E. Customers whose checking accounts do not have a minimum-balance requirement are more likely than others to write checks for small amounts.
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Option A - INCORRECT.
This statement does not support the banks prediction. Because, the aim of the bank is to overdraw checking accounts so they can generate their administrative cost so the assumption can't be enforce on the customers.
Option B - INCORRECT.
This statement would have been true but the prediction of the officials does not clarify any possibility in it.
Option - C - INCORRECT.
This statement is not valid. If their account is above the minimum then the bank won't be charging them extra fees on maintenance.
Option D - CORRECT.
This option has been able to support the bank officials prediction. Customers with checking accounts who have been unable to maintain the minimum balance requirement are more likely than others to overdraw their older account. By doing this the bank will be checking overdrawn account $30 each so as to cover their projected administrative cost of $3 per account per month.
Option E - INCORRECT.
This statement did not predict the officials conclusion on how to generate projected administrative cost.
This statement does not support the banks prediction. Because, the aim of the bank is to overdraw checking accounts so they can generate their administrative cost so the assumption can't be enforce on the customers.
Option B - INCORRECT.
This statement would have been true but the prediction of the officials does not clarify any possibility in it.
Option - C - INCORRECT.
This statement is not valid. If their account is above the minimum then the bank won't be charging them extra fees on maintenance.
Option D - CORRECT.
This option has been able to support the bank officials prediction. Customers with checking accounts who have been unable to maintain the minimum balance requirement are more likely than others to overdraw their older account. By doing this the bank will be checking overdrawn account $30 each so as to cover their projected administrative cost of $3 per account per month.
Option E - INCORRECT.
This statement did not predict the officials conclusion on how to generate projected administrative cost.
