Florida Real Estate Practice Exam

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What rate applies for an overnight loan from one bank to another without collateral?

Adjustable
Discount
Federal funds
Prime

The correct answer is: Federal funds

The federal funds rate refers to the interest rate at which banks lend money to each other overnight. This is without collateral, meaning there is no guarantee for the loan. Options A, B, and D do not accurately represent the type of loan described in the question. Adjustable refers to an interest rate that can change over time, discount is a reduced price or rate, and prime usually applies to loans with collateral. Therefore, these options are incorrect for an overnight loan without collateral.