What is the prime rate and how is it used by financial institutions?

Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
Publisher:Leach
Chapter7: Types And Costs Of Financial Capital
Section: Chapter Questions
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What is the prime rate and how is it used by financial institutions?

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Prime rate :

Prime rates is the rate charged by the commercial banks on the customers that are highly creditworthy. These customers generally include big corporate firms etc. Prime rate is decided by the overnight rates that banks use to charge each other.

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