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1 FINANCE MCQS

The transaction of federal funds usually takes place in the form of __________?

  • Functional loans
  • Annual loans
  • Unsecured loans
  • Secured loans
Correct Answer: C. Unsecured loans

Detailed Explanation

Federal funds transactions are typically unsecured loans between financial institutions, mainly banks. These loans are short-term, often overnight, and do not require collateral. They help banks meet their reserve requirements and manage liquidity efficiently.

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