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A bank deemed to be financially not healthy may take out a loan under close Federal...

A bank deemed to be financially not healthy may take out a loan under close Federal Reserve scrutiny. Such a loan is known as

-primary credit discount loan

-secondary credit discount loan

-covenant

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Answer #1

A bank deemed to be financially not healthy may take out a loan under close Federal Reserve scrutiny. Such a loan is known as secondary credit discount loan.

Explanation:

secondary credit discount loan is a loan made by the Fed to a bank that is not highly rated or the banks in trouble, under which the Fed carefully scrutinizes the purpose of the loan and the ability of the bank to repay the loan; the secondary credit discount rate is 1/2 percentage points higher than the rate of primary credit.

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