In borrowing and lending of federal funds, the federal funds rate is result of function between _____________?
Correct answer: C. supply and demand
- A. assets and liability
- B. cost and marketing
- C. supply and demand
- D. income and expense
Explanation
The federal funds rate is determined by the interaction of banks’ willingness to lend funds and other banks’ need to borrow them. This supply-and-demand process establishes the market rate.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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