Which of the following rates is subject to the most frequent changes?
A.
Prime
B.
Call loan
C.
Discount
D.
Federal funds
The Answer Is:
D
This question includes an explanation.
Explanation:
The federal funds rate, which is the interest rate banks charge each other for overnight loans, changes frequently due to daily fluctuations in bank reserves and market conditions.
D is correct as it is the most sensitive to short-term market forces.
A, B, and C change less frequently.
[Reference: SIE Study Guide, Chapter 2: Interest Rates, , , , , , ]
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