Since 2003, the Fed's Rate on Short-Term Loans to Depository

question 50

Multiple Choice

Since 2003, the Fed's rate on short-term loans to depository institutions is referred to as the

• A)discount rate.
• B)primary credit lending rate.
• C)Federal funds rate.
• D)prime rate

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Definitions:

Crossover Rate

The rate of return at which two projects have the same net present value; used in capital budgeting to evaluate the desirability of investments or projects.

WACC

A measure of a firm's blended cost of capital across all sources, including equity and debt.

NPV

Net Present Value is the calculation used to determine the value of future cash flows in today's dollars, subtracting the initial investment.

Multiple IRRs

Situations where a project or investment has more than one internal rate of return, occurring with alternating cash flows (positive and negative).