The Interest Rate That Banks Charge One Another for Overnight

question 146

Multiple Choice

The interest rate that banks charge one another for overnight lending of reserves is the

• A)federal funds rate
• B)interbank credit card rate
• C)subprime mortgage rate
• D)prime rate
• E)local funds rate

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Definitions:

Efficient Markets Hypothesis

A theory that asserts that financial markets are "informationally efficient", meaning that prices of securities fully reflect all available information at any point in time.

EMH

Efficient Market Hypothesis, a theory that suggests all available information is already reflected in stock prices, hence making it difficult to achieve consistently higher returns.

Geometric Average

The geometric average is a method of calculating the mean that mitigates the impact of extreme values in a data set, commonly used in calculating investment returns.

Historical Record

Documentation or an account of past events, actions, or operations, serving as evidence or information about previous occurrences.