The Benchmark or Prime Rate of Interest for Overdrafts Varies

question 81

Multiple Choice

The benchmark or prime rate of interest for overdrafts varies directly with:

• A) demand for funds in the bond markets.
• B) varying demand and supply for funds in the short-term markets.
• C) varying demand and supply for funds in the long-term markets.
• D) changing asset prices.

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Definitions:

Drawer

The person who issues or writes a negotiable instrument, such as a check, directing the payment of the specified amount of money.

Demand Instrument

A financial instrument that is payable immediately upon demand, such as a check or certain promissory notes.

Definition

A precise statement or description of the nature, scope, or meaning of something.

Check

A draft drawn by a drawer ordering the drawee bank or financial institution to pay a certain amount of money to the holder on demand.