The prime rate of interest fluctuates with
A) the changing supply and demand relationship for long-term funds.
B) the changing supply and demand relationship for short-term funds.
C) the risk of the firm borrowing the funds.
D) demand in the bond market.

Question

Quizplus · Accepted Answer

The prime rate of interest is the interest rate that banks charge their most creditworthy customers for short-term loans. As such, it fluctuates with the changing supply and demand relationship for short-term funds.

The Prime Rate of Interest Fluctuates with