The interest rate on short-term loans that large banks charge their commercial borrowers who have...

The prime rate is the interest rate that large banks charge their most creditworthy commercial borrowers for short-term loans. It serves as a benchmark for other lending rates. Option A (funds rate) refers to the federal funds rate, the rate at which banks lend to each other overnight. Option B (market rate) is a generic term and not specific to this context. Option C (discount rate) is the rate the Federal Reserve charges banks for short-term loans. The prime rate is a key concept in the Accounting and Finance category of the Praxis 5101 exam, as it relates to business financing and credit.