Generally, the prime interest rate:
A)moves in the opposite direction as the overnight lending rate.
B)remains constant over long periods of time.
C)is highly inflexible downward.
D)moves in the same direction as the overnight lending rate.

Question

Quizplus · Accepted Answer

The prime interest rate typically moves in the same direction as the overnight lending rate. If the overnight lending rate increases, banks may increase their prime rate as well, while a decrease in the overnight lending rate may lead to a decrease in the prime rate.

Generally, the Prime Interest Rate