The extra collateral the Fed requires above the value of a discount loan is known as
A)the term premium.
B)a haircut.
C)a covenant.
D)secondary credit.

Question

Quizplus · Accepted Answer

The term for the extra collateral required by the Fed above the value of a discount loan is known as a haircut. This helps to ensure that the Fed is adequately protected in case the borrower is unable to repay the loan. The other options listed are not related to this concept.

The Extra Collateral the Fed Requires Above the Value of a Discount