The interest rate at which chartered banks can borrow from the Bank of Canada is the
A) preferred rate.
B) prime rate.
C) prime plus 1 percent.
D) bond rate.
E) bank rate.

Question

Quizplus · Accepted Answer

The interest rate at which chartered banks can borrow from the Bank of Canada is known as the bank rate. Therefore, the correct choice is E. The preferred rate is the rate at which banks lend to their best customers, the prime rate is the rate at which banks lend to their most creditworthy customers, and the prime plus 1 percent is a hypothetical rate. The bond rate is the interest rate paid on a bond, which is a debt security that investors purchase from a government or corporation.

The Interest Rate at Which Chartered Banks Can Borrow from the Bank