FINRA SIE quiz: Federal funds rate

Which of the following best describes the federal funds rate?

A. Member bank lending rate to other member banks
B. Member bank lending rate to broker-dealers
C. Federal Reserve lending rate to member banks
D. Member bank lending rate to their best customers

Answer: A. Member bank lending rate to other member banks

The federal funds rate is the rate that member banks charge to other member banks for loans. Member banks are members of the Federal Reserve System.

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