The interest rate charged by a bank that loans excess reserves to another bank is called the

Question

Quizplus · Accepted Answer

The interest rate charged by a bank that loans excess reserves to another bank is called the federal funds rate. This is the rate at which banks lend to each other overnight to meet reserve requirements set by the Federal Reserve. The other options are incorrect as the margin rate refers to the additional interest rate charged by lenders above the benchmark rate, the prime rate is the interest rate offered to a bank's most creditworthy customers, the discount rate is the interest rate charged by the Federal Reserve when it lends money to member banks, and the bank rate is the interest rate at which a central bank lends to domestic banks.

The Interest Rate Charged by a Bank That Loans Excess