In terms of interest rates, the ‘base rate’ is:

In terms of interest rates, the ‘base rate’ is:
A . The interest rate set by government or the central bank of a country
B . The interest rate stated within a contract of supply for late payments
C . The interest rate payable on a loan for the procurement of a new instrument
D . The interest rate used to calculate repayments on a credit card

View Answer

Answer: A

Explanation:

The base rate is often used as a basis for the calculation of other rates, some of which eg credit card repayment rates, bear no resemblance to the base rate. Some longer-term, perhaps more responsible, lending, uses changes in the base rate to determine a repayment rate for debt eg mortgage rates. For credit card repayment rates and for late payments in business contracts there is often a considerable amount of freedom to agree relevant rates, but government is often encouraged to influence to try to ensure some level of sanity.

The answer which references procurement of a new ‘instrument’ is an attempt at humour, ‘base’ being a type of guitar.