A US bank is subject to two restrictions: a required reserve ratio of 15% and the limit on the deposit rate of 8% per year. Suppose that a non-US branch of the bank does not have to put any reserves aside and can promise to pay a 9.5% deposit rate per year. Consider one-year period. If both US and non-US branches can lend money at 12% per year, how much more interest expense will the non-US branch have to pay to the depositor compared to the US branch on a $100 deposit?

A US bank is subject to two restrictions: a required reserve ratio of 15% and the limit on the deposit rate of 8% per year. Suppose that a non-US branch of the bank does not have to put any reserves aside and can promise to pay a 9.5% deposit rate per year. Consider one-year period. If both US and non-US branches can lend money at 12% per year, how much more interest expense will the non-US branch have to pay to the depositor compared to the US branch on a $100 deposit?

Between $0.27 and $0.47

Between $0.47 and $0.67

Between $0.67 and $0.87

Between $0.87 and $1.07

Between $1.07 and $1.27

Between $1.27 and $1.47

Between $1.47 and $1.67

Between $1.67 and $1.87