SIE - Securities Industry Essentials Exam
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The FED just cut rates by 25 basis points at its quarterly meeting. Which interest rate do they adjust?
The prime rate that is used for lending
A
The LIBOR
B
The overnight lending rate between banks
C
The 10 year note yield
D
Explanations
The Federal Reserve Board adjusts the Federal Funds rate; which is the overnight lending rate that member banks charge each other for overnight funds. LIBOR is the London Interbank Offering Rate. The prime rate is always higher than the Fed Funds rate.