If the operating band for the overnight interest rate is from 3.5 to 4.0 percent,then ________.
A) the bank rate is 4.0 percent
B) the bank rate is the lower limit of the operating band
C) the bank rate is the rate the Bank of Canada charges LVTS participants with negative settlement balances at the end of the banking day
D) Both A and C of the above.

Question

Quizplus · Accepted Answer

A) When the operating band for the overnight interest rate is from 3.5 to 4.0 percent, the bank rate is set at the upper limit of the operating band, which is 4.0 percent.
C) The Bank of Canada charges LVTS (Large Value Transfer System) participants with negative settlement balances at the end of the banking day at the bank rate. Therefore, the bank rate is the rate the Bank of Canada charges LVTS participants with negative settlement balances at the end of the banking day.

If the Operating Band for the Overnight Interest Rate Is