Vidyalelo
Management · Q460

International Finance and Treasury

Graduate and Post Graduate · Management · question 460

Q460

Type of funds that have transfer transactions between financial institutions are classified as

A.
federal funds
Answer
B.
premium funds
C.
discount funds
D.
mean funds

Answer: Option A

Solution

Answer: Option A
Solution:
Type of funds that have transfer transactions between financial institutions federal fundsare classified as federal funds. Federal funds, often referred to as fed funds, are excess reserves that commercial banks and other financial institutions deposit at regional Federal Reserve banks; these funds can be lent, then, to other market participants with insufficient cash on hand to meet their lending and reserve needs