ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A prime rate is the interest rate that banks give to their best customers such as large corporations. The prime rate, which is the interest rate the bank charges on loans to its most creditworthy customers, is adjusted up or down as interest rates on traded securities change.

Detailed explanation-2: -The prime rate is the current interest rate that financial institutions in the U.S. charge their best customers. These customers have excellent credit, and are eligible for this optimal rate because their loans carry the lowest risk for their financial institutions.

Detailed explanation-3: -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-4: -Prime lending rate is the interest rate at which banks lend to its most credit worthy customers.

Detailed explanation-5: -The prime interest rate, also known as the “prime rate, ” is the interest rate commercial banks charge their most credit-worthy business customers. It is a baseline rate upon which all floating rate loans are negotiated (for example, prime + 3%). The prime rate is set by financial institutions in a competitive fashion.