Discount Calling Rate

Paul HL asked:


…..thinking about borrowing funds froms from the Fed. If the Bank of Homewood does acquire funds from the Fed it will :
a) have to pledge some of its securities as collateral, because the Fed does not make unsecured loans.
b) pay a rate of interest on the amount borrowed called the RESERVE rate.
c) pay a rate of interest on the amount borrowed called the DISCOUNT rate.
d) be required to use the funds to offer loans to small businesses owned by women and minorities.

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sheryl s asked:


a) A risk free equity (a US Treasury Note - called risk free because if they can’t pay, your money is worthless!)
b) A CD at a South American bank paying in their local currency.
c) A stock in a company that has a secure stream of income from a long term contract customer.
d) A stock in a company that has an interesting business plan but no real operations as of yet (as NY Lotto says “A Dollar and A Dream”)

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