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1 FINANCE MCQS

The type of funds involving transfer transactions between financial institutions are called __________?

  • Federal funds
  • Premium funds
  • Discount funds
  • Mean funds
Correct Answer: A. Federal funds

Detailed Explanation

Federal funds refer to short-term funds that are transferred between financial institutions, mainly banks, to maintain reserve requirements set by the central bank. These transactions are usually overnight and play a crucial role in the interbank lending market.

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