Economics · Prime Rate
What is the 'Prime Rate' in the banking sector?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The interest rate at which commercial banks borrow money from the central bank.
- 2The lowest interest rate charged by commercial banks to their most creditworthy customers.✓
- 3The penalty interest rate applied to defaulted loans.
- 4The maximum interest rate a bank can charge under central bank guidelines.
Correct answer
The lowest interest rate charged by commercial banks to their most creditworthy customers.
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