Question

question 2 of 10
what is a discount rate?

a. the interest rate on u.s. treasury and other federal agency
securities

b. interest rate charged to banks on loans they receive from the
federal reserve

c. special interest rates banks get for having a large number of
branches and customers

d. special interest rate available to longtime customers of a bank

Explanation:

• Option A describes the interest rate on U.S. Treasury and federal agency securities, which is not the discount rate.
• Option B is the correct definition of the discount rate: it's the interest rate the Federal Reserve charges banks for loans.
• Option C: A bank's branch/customer count doesn't determine a "special" rate related to the discount rate.
• Option D: A special rate for longtime bank customers is not the discount rate (discount rate involves Fed - bank transactions, not customer - bank).

Answer:

B. Interest rate charged to banks on loans they receive from the Federal Reserve