Primary Credit Is Only a Backup Source of Funds for Health

question 116

Multiple Choice

Primary credit is only a backup source of funds for health banks since

• A)the primary credit rate is set above the federal funds rate.
• B)restrictions as to its use limit its benefits.
• C)the secondary credit rate pays 0.5% more.
• D)banks must seek funds from other sources prior to requesting a discount loan.

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Definitions:

Debenture Bonds

Unsecured bonds that rely on the creditworthiness and reputation of the issuer for support, not on collateral.

Quoted Price

The most current price at which an asset or service can be bought or sold in a marketplace.

Cash

Cash refers to money in physical form, such as banknotes and coins, that is available for immediate use.

Effective Interest Rate

The true interest rate when compounding interest is taken into account, differing from nominal rate.