Which of the Following Statements Is Incorrect with Respect to the Federal

question 38

Multiple Choice

Which of the following statements is incorrect with respect to the federal funds rate?

• A)It is the rate charged by financial institutions on loans they extend to each other.
• B)It is not influenced by the supply and demand for funds in the federal funds market.
• C)The federal funds rate is closely monitored by all types of firms.
• D)Many market participants view changes in the federal funds rate to be an indicator of potential changes in other money market rates.
• E)The Federal Reserve adjusts the amount of funds in depository institutions in order to influence the federal funds rate.

Analyze and solve problems involving loan repayment schedules, including determining the size of equal payments.

Understand the implications of interest rate changes on loans and investments.

Calculate maturity values of investments using given interest rates and time periods.

Determine the amount of interest credited to accounts over specific periods.

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Definitions:

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