One of the advantages of a prime rate set by a financial institution is that it is less likely to be affected by:
A) changes in the bank bill swap rate.
B) short-term market illiquidity.
C) short-term credit fluctuations.
D) all of the given answers.

Question

Quizplus · Accepted Answer

Prime rate set by a financial institution is based on their own internal lending policies and is less likely to be affected by short-term credit fluctuations. However, it is still possible for the prime rate to be affected by changes in the bank bill swap rate or short-term market illiquidity. Therefore, options A and B are not entirely correct. Choice D, which states all three options, is incorrect as it is not an accurate statement.

One of the Advantages of a Prime Rate Set by a Financial