What is the Prime Rate? - History & Explanation


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What is the definition of the prime rate, according to this article?

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1. Who sets the prime rate?

2. What is the relationship between the Federal Funds Rate and the prime rate?

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About This Quiz & Worksheet

Use this quiz/worksheet combo to help you test your understanding of the prime rate. Some of the topics you'll be assessed on include explaining what prime rate means as well as the relationship between the prime rate and the Federal Funds Rate.

Quiz & Worksheet Goals

In these assessments you'll be tested on:

  • Definition and uses of the prime rate
  • Financial institution(s) that set the prime rate
  • Current prime rate based on the Federal Funds rate

Skills Practiced

This quiz and worksheet allow students to test the following skills:

  • Reading comprehension - ensure that you draw the most important information from the related lesson on the prime rate
  • Interpreting information - verify that you can read information regarding the prime rate and the Federal Funds Rate and explain the relationship between the two
  • Information recall - access the knowledge you've gained regarding uses of the prime rate
  • Knowledge application - use your knowledge to answer questions about the financial institution(s) that set the prime rate

Additional Learning

To learn more about interest rates, review the accompanying lesson called What is the Prime Rate? History & Explanation. This lesson covers the following objectives:

  • Know how the prime rate is calculated
  • Explain how banks use the prime rate
  • Define published prime rate
  • Explain what a benchmark rate is