Questions: This is the interest rate that banks charge on loans to their largest and most secure corporate borrowers.
The Fed-Funds Rate
The Corporate Rate
The Prime Rate
The Discount Rate
Transcript text: This is the interest rate that banks charge on loans to their largest and most secure corporate borrowers.
The Fed-Funds Rate
The Corporate Rate
The Prime Rate
The Discount Rate
Solution
The answer is the third one: The Prime Rate.
Explanation for each option:
The Fed-Funds Rate: This is the interest rate at which depository institutions lend reserve balances to other depository institutions overnight. It is not specifically the rate charged to the largest and most secure corporate borrowers.
The Corporate Rate: This term is not a standard term used to describe a specific interest rate in banking. It is not the rate charged to the largest and most secure corporate borrowers.
The Prime Rate: This is the interest rate that banks charge on loans to their most creditworthy and secure corporate borrowers. It is often used as a benchmark for other loans and is typically set by the banks themselves.
The Discount Rate: This is the interest rate charged by central banks on loans they provide to commercial banks. It is not the rate charged to the largest and most secure corporate borrowers.
In summary, the Prime Rate is the correct answer as it specifically refers to the rate charged to the most secure corporate borrowers.