Final answer:
The interest rate that banks charge brokerage firms on money they borrow to lend to margin account customers has three names: the prime rate, the discount rate, and the federal funds rate.
Step-by-step explanation:
The interest rate that banks charge brokerage firms on money they borrow to lend to margin account customers has three names: the prime rate, the discount rate, and the federal funds rate.
The prime rate is the interest rate at which banks lend to their most creditworthy customers, which in turn affects the interest rates charged by banks to brokerage firms.
The discount rate is the interest rate charged by the Federal Reserve to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility.
The federal funds rate is the interest rate at which one bank lends funds to another bank on an overnight basis.