Which of the following terms refers to the percentage of its deposits a bank must hold,in cash or on deposit,with a Federal Reserve Bank?
A) Discount rate
B) Key rate
C) Prime rate
D) Federal insurance premium
E) Reserve requirement

Question

Quizplus · Accepted Answer

The reserve requirement refers to the percentage of its deposits that a bank must hold in reserve, either in cash or on deposit with a Federal Reserve Bank. The discount rate is the interest rate at which banks can borrow money from the Federal Reserve, while the key rate and prime rate refer to interest rates used by banks to set loans and credit card rates. Federal insurance premium is a fee charged by the Federal Deposit Insurance Corporation to cover the cost of insuring deposits in the event of a bank failure.

Which of the Following Terms Refers to the Percentage of Its