When a Bank Borrows from the Federal Reserve, It Pays

question 379

Multiple Choice

When a bank borrows from the Federal Reserve, it pays the:

• A)required reserve ratio.
• B)discount rate.
• C)federal funds rate.
• D)prime rate.

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Definitions:

Declared

Refers to a dividend or other corporate action that has been formally announced by a company's board of directors.

Payment of Dividends

This refers to the distribution of a portion of a company's earnings to its shareholders.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, recognizing the asset's wear and tear, deterioration, or obsolescence.

Indirect Method

A way of calculating cash flows in the statement of cash flows where net income is adjusted for non-cash transactions and changes in working capital.