The type of funds that have transfer transactions between financial institutions are classified as __________?
Correct answer: A. federal funds
- A. federal funds
- B. premium funds
- C. discount funds
- D. mean funds
Explanation
Federal funds are short-term funds transferred, usually overnight, among depository institutions to manage reserve positions. They are not premium or discount funds, so the institutional-transfer clue identifies federal funds.
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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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