The discount rate refers to

A) the penalty paid by risky bank borrowers;that is,the amount of interest they pay in excess of the prime rate.
B) the rate at which banks write off bad loans.
C) the rate at which assets lose their real value as a result of inflation.
D) the rate at which money loses its value as a result of inflation.
E) the rate of interest that the Fed charges on loans to commercial banks and thrift institutions.

Discount Rate

The discount rate is the interest rate charged to commercial banks and other financial institutions for loans received from the Federal Reserve's discount window.

Prime Rate

The interest rate that commercial banks charge their most credit-worthy customers, frequently used as a benchmark in lending rates.

Commercial Banks

Financial institutions that accept deposits, offer various loans, and provide other financial services to the public.