Answer:
C is the answer.
Explanation:
The federal funds market is an overnight market where commercial banks with excess reserve funds lend to needy depository institutions.
This enables the lending institutions to earn some overnight interests while at the same time enabling borrowing institutions to meet their reserve requirements at the Federal Reserve. Federal Reserves are reserves of outstanding assets and liabilities of federal institutions that are required to be kept at the Federal Reserve or in the cash vaults.
The rates for such exchanges are agreed between the lending and borrowing institutions, and then weighed by the Federal Reserve to establish a federal reserve rate.
