In determining the cost of bank financing, which is the important factor?
A) Prime rate
B) Nominal rate
C) Effective rate
D) Discount rate

Question

Quizplus · Accepted Answer

The effective rate is the important factor in determining the cost of bank financing as it includes both the nominal rate and any additional fees or charges associated with the loan. The prime rate is simply a benchmark used by banks to determine their own rates, while the discount rate is used by the Federal Reserve to control the supply of money in the economy.

In Determining the Cost of Bank Financing, Which Is the Important