MENU
Which of the following rates is the interest rate at which banks borrow and lend to each other on an overnight basis?
Suggested Answer: C
Get Premium SIE Questions
as Interactive Web-Based Practice Test or PDF
Real Exam Format
Detailed Explanations
Instant Access
Get Your Practice Test
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.
20 comments · newest first
ED
Edelmira
2 months ago
C makes sense. It's crucial for banks' liquidity.
CH
Charlene
2 months ago
I remember learning about this. C is the answer!
VI
Vinnie
2 months ago
Definitely C. The prime rate is different.
XU
Xuan
3 months ago
I was torn between C and A. But C feels more accurate.
XO
Xochitl
3 months ago
Agreed, Alex. It's the overnight lending rate.
PH
Phillip
3 months ago
I think it's C) Federal funds rate. Seems right.
AV
Avery
3 months ago
100% agree, it's the Federal funds rate!
DO
Dortha
3 months ago
Wait, are we sure it's not the discount rate?
RO
Ronny
3 months ago
Prime rate is for loans, not overnight borrowing.
CL
Claribel
4 months ago
I thought it was LIBOR, but I guess not.
RE
Reyes
4 months ago
It's definitely the Federal funds rate!
SH
Shenika
4 months ago
Prime rate is for loans, not overnight borrowing!
MO
Mose
4 months ago
Wait, are we sure about that?
JE
Jeff
4 months ago
Yeah, C is the right answer!
CI
Ciara
6 months ago
I thought it was LIBOR, but I guess not.
SH
Sharika
6 months ago
It's definitely the Federal funds rate!
MI
Milly
7 months ago
I practiced a question like this before, and I think the discount rate is different from what they’re asking here. It’s definitely not that one.
TI
Tien
7 months ago
The prime rate sounds familiar, but I feel like that's for consumer loans, not interbank lending.
LE
Lezlie
7 months ago
I recall that the LIBOR is more about international lending rates, so I don't think that's it. It has to be the Federal funds rate.
JA
Jamal
7 months 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.