CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

The interest rate at which brokerage firms borrow funds from banks to use in margin lending is called the ______.

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..
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