SIE Exam Question 1026: Answer and Explanation

Question: 1026

____ The short-term interest rate charged by banks on loans extended to broker-dealers, who then use the funds to make margin loans on behalf of customers.

• A. Call loan rate
• B. Discount rate
• C. Fed funds rate
• D. LIBOR

Correct Answer: A

Explanation:

The call loan rate is the short-term interest rate charged by banks on loans extended to broker-dealers, who then use the funds to make margin loans on behalf of customers.