The Interest Rate on Primary Credit Extended by the Fed

question 126

Multiple Choice

The interest rate on primary credit extended by the Fed is:

• A)The average of the prime interest rate charged by the ten largest banks in the nation
• B)100 basis points below the target federal funds rate
• C)100 basis points above the target federal funds rate
• D)Equal to the target federal funds rate

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Definitions:

Binomial Formula

A mathematical formula used to calculate the probability of obtaining a given number of successes in a binomial experiment.

Random Sample

A subset of individuals chosen from a larger set (population) where each individual has an equal probability of being selected, ensuring the sample’s representativeness of the population.

Binomial Random Variable

A random variable that follows a binomial distribution, representing the number of successes in a fixed number of independent Bernoulli trials with the same probability of success.

Variance

Variance is a statistical measure that represents the degree of spread in a data set. It is calculated as the average of the squared differences from the Mean.