Question : The interest rate charged by commercial banks on loans is called:
Option 1: Repo rate
Option 2: Reverse repo rate
Option 3: Prime lending rate
Option 4: None of the above
Correct Answer: Prime lending rate
Solution : The correct answer is (c) Prime lending rate.
The interest rate charged by commercial banks on loans is commonly referred to as the prime lending rate. The prime lending rate is the rate at which commercial banks lend to their most creditworthy customers, usually large corporations or financial institutions. It serves as a benchmark for determining interest rates on various types of loans, such as business loans, personal loans, and mortgages. The repo rate and reverse repo rate, on the other hand, are set by the central bank and represent the rates at which the central bank lends to or borrows from commercial banks during short-term liquidity operations.
Related Questions
Trending Articles/News
