Finra SIE Exam - Topic 2 Question 22 Discussion

Actual exam question for Finra's SIE exam

Question #: 22
Topic #: 2

[All SIE Questions]

Which of the following rates is the interest rate at which banks borrow and lend to each other on an overnight basis?

APrime rate

BDiscount rate

CFederal funds rate

DLIBOR

Show Suggested Answer

Suggested Answer: C

Step by Step

Federal Funds Rate: The rate at which depository institutions lend reserves to each other overnight. It is set by the Federal Open Market Committee (FOMC).

Other Rates:

Prime Rate: Rate banks charge their most creditworthy customers.

Discount Rate: Rate the Federal Reserve charges banks for borrowing directly from it.

LIBOR: Interbank lending rate used internationally, now being phased out.

Federal Reserve Explanation of Rates: Federal Funds Rate.

by Trevor at Apr 10, 2026, 01:46 AM

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Jamal

3 days ago

I think the answer might be the Federal funds rate, but I'm not completely sure. I remember it being related to overnight lending.

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