The Federal Funds Rate Is the Interest Rate That

question 21

Multiple Choice

The federal funds rate is the interest rate that:

• A) the government charges banks to borrow money
• B) the Fed charges banks to borrow money
• C) the federal government pays to borrow money
• D) federally chartered banks charge their customers for commercial loans.
• E) banks charge other banks for short-term loans.

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Definitions:

Right-Of-Use Asset

Right-of-use asset is a balance sheet item that represents a lessee’s right to use an asset over the lease term under the new accounting standards.

Performance Obligation Approach

An accounting method that recognizes revenue when a company satisfies a performance obligation by transferring a promised good or service to a customer.

Capital Leases

Leases that are treated like asset purchases for accounting purposes because they transfer substantially all risks and rewards of ownership.

Minimum Operating Lease Payments

The lowest total amount that a lessee is obliged to pay over the lease term for the right to use an underlying asset, excluding contingent rent and lease incentives.