Prime Rate, Discount Rate, Fed Funds Rate
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Please help with the following:
1.- The definition of Prime Rate, Discount Rate, Fed Funds Rate
2.- Which rate is controlled by the bank?
3.- Which rate is directly controlled by the fed?
4.- Which rate is indirectly controlled by the fed?
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This solution discusses prime rate, discount rate, and fed funds rate.
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1. Prime rate is a term applied in many countries to a reference interest rate used by banks. The term originally indicated the rate at which banks lent to their most favored customers, though this is no longer always the case. Some variable interest rates may be expressed as a percentage above or below prime rate.
Discount rate is a financial concept based on the future cash flow in lieu of the present value of the cash flow. The divisor in the discount rate formula is the resultant future value, including ...
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