True or False: The prime rate is usually the same among major banks.

True or False: The prime rate is usually the same among major banks.

• A. True
• B. False
• C. Varies based on the region
• D. Depends on the bank's lending policies

Answer: (A)

The statement is true because the prime rate is typically set by major banks in relation to the federal funds rate and is influenced by the monetary policy set by the central bank. While there may be slight variations among different banks, these differences are often negligible. The prime rate serves as a benchmark interest rate for a variety of loans, including personal and small business loans. As a result, major banks usually align their prime rates closely, leading to a common figure that is reliable for consumers and businesses when planning for borrowing costs. This consistency among major banks reflects a coordinated response to the overall economic environment and prevailing interest rates rather than individual bank policies.

The statement is true because the prime rate is typically set by major banks in relation to the federal funds rate and is influenced by the monetary policy set by the central bank. While there may be slight variations among different banks, these differences are often negligible. The prime rate serves as a benchmark interest rate for a variety of loans, including personal and small business loans. As a result, major banks usually align their prime rates closely, leading to a common figure that is reliable for consumers and businesses when planning for borrowing costs. This consistency among major banks reflects a coordinated response to the overall economic environment and prevailing interest rates rather than individual bank policies.