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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?

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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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Ciara
18 days ago
I thought it was LIBOR, but I guess not.
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Sharika
23 days ago
It's definitely the Federal funds rate!
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Milly
1 month 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.
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Tien
1 month ago
The prime rate sounds familiar, but I feel like that's for consumer loans, not interbank lending.
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Lezlie
2 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.
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Jamal
2 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.
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