Finance
The prime rate in lending is best described as:
AThe government's mandated maximum interest rate
BThe benchmark rate banks charge their most creditworthy commercial customers, used as a reference for other rates✓ Correct
CThe Federal Reserve's target federal funds rate
DThe minimum rate all lenders must charge
Explanation
The prime rate is the interest rate that commercial banks charge their most creditworthy business customers. It is used as a benchmark for many consumer loans (like HELOCs) and is typically 3% above the federal funds rate.
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