BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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banks charge each other on overnight borrowing necessary to be in compliance with reserve requirements.
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the Federal Reserve charges member banks when they borrow reserves from a regional Federal Reserve Bank.
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individual commercial banks charge on any given day for unsecured business loans.
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banks charge their best corporate borrowers and most reliable customers.
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Detailed explanation-1: -What is the Prime Rate? The term “prime rate” (also known as the prime lending rate or prime interest rate) refers to the interest rate that large commercial banks charge on loans and products held by their customers with the highest credit rating.
Detailed explanation-2: -The prime rate is the interest rate that commercial banks charge their most creditworthy customers, generally large corporations.
Detailed explanation-3: -The prime rate is the lowest rate that consumers can borrow money from banks. It typically tracks with the federal funds rate and is generally about 3% higher than the Federal Reserve’s discount rate. The prime rate is the lowest rate that consumers can borrow money from banks.
Detailed explanation-4: -The prime rate is the current interest rate that financial institutions in the U.S. charge their best customers.
Detailed explanation-5: -The prime rate, in turn, is based on the federal funds rate. Also known as The Wall Street Journal prime rate or the U.S. Prime Rate, it’s a benchmark set and used by financial institutions to determine how much interest to charge a bank’s customers on loans.