The ____ Rate Is the Interest Rate Charged on the Fed's

question 50

Multiple Choice

The ____ rate is the interest rate charged on the Fed's short-term loans to depository institutions.

• A) federal funds
• B) prime
• C) primary credit lending
• D) real

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Definitions:

Disbursement Float

The time lag between when a payment is made by writing a check and when the funds are actually removed from the payer's account.

Float Costs

The expenses associated with issuing new stocks or bonds, including underwriting, legal, and registration fees.

Optimal Cash Balance

The ideal amount of cash a company should hold to minimize both holding costs and transaction costs.

Float Cost Impact

The effect of delayed checks or securities settlements on the use of funds, which can affect a company's cash flow.