The transactions that came into being when borrowing and lending of excess money occurs, are considered as _________?
Correct answer: C. federal funds transaction
- A. annual funds transaction
- B. liable funds transactions
- C. federal funds transaction
- D. functional funds transaction
Explanation
Federal funds transactions occur when banks lend or borrow excess reserve balances, usually overnight, among themselves. They are not annual or merely “functional” funds transactions.
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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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