Overnight funds are ________.
A) funds raised by the federal government in the bond market
B) loans made by the Bank of Canada to banks
C) loans made by banks to the Bank of Canada
D) loans made by banks to each other

Question

Quizplus · Accepted Answer

Overnight funds refer to loans made by banks to each other to meet short-term cash requirements. Banks typically lend and borrow from each other through the overnight lending market. Option A is incorrect as it refers to bonds issued by the federal government, which is not related to overnight funds. Option B is incorrect as it refers to loans made by the Bank of Canada to banks, which is not the same as the overnight lending market. Option C is incorrect as it refers to loans made by banks to the Bank of Canada, which is the opposite of overnight funds.

Overnight Funds Are ________