The Primary Credit Rate Refers to the Rate at Which

question 97

Multiple Choice

The primary credit rate refers to the rate at which

• A)banks lend to one another to meet reserve requirements.
• B)the Federal Reserve charges banks (with excellent credit)for loans.
• C)banks lend to their best customers.
• D)none of these options are correct.

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Definitions:

Compounded Annually

A method of calculating interest where the earned interest is added to the principal at the end of each year, increasing the amount that will earn interest in the following year.

Acquisition Cost

Refers to all of the costs involved in acquiring a new asset or company, including the purchase price and all associated expenses.

Deferred Ordinary Annuity

An annuity contract that begins payments at a specified future date, as opposed to immediately after the initial investment.

Present Value

The value today of a future sum of money or sequence of cash inflows, factoring in a given return rate.