Which of the following is an administered interest rate set by the Federal Reserve?
A) The discount rate
B) The federal funds rate
C) The prime rate
D) The commercial paper rate

Question

Quizplus · Accepted Answer

The discount rate is an administered interest rate set by the Federal Reserve. It is the interest rate at which banks can borrow money directly from the Fed in the event of a liquidity shortfall. The federal funds rate is the interest rate at which banks lend to each other overnight and is influenced by the Fed but not directly administered by it. The prime rate and commercial paper rate are both set by banks and are not administered by the Fed.

Which of the Following Is an Administered Interest Rate Set