CFA Practice Question
The interest rate at which brokerage firms borrow funds from banks to use in margin lending is called the ______.
B. prime lending rate
C. call money rate
A. margin rate
B. prime lending rate
C. call money rate
Correct Answer: C
The brokers borrow from their banks at the call money rate - also called the broker call loan rate (regulated by the Fed). The broker charges the customer a rate higher than that (frequently tied to the prime rate).
User Contributed Comments 2
| User | Comment |
|---|---|
| kalps | Broker call loan rate or the call money rate |
| sarath | Brokers are charged at the call money rate...from the banks for margin loans... but the brokers themselves charge a higher amount than that to the client.. |