Which interest rate is typically applied to corporations with high credit ratings for unsecured loans?

The prime rate is the correct answer as it represents the interest rate that commercial banks offer to their most creditworthy customers, which typically include corporations with high credit ratings. This rate is often used as a benchmark for various loan products, particularly unsecured loans.

Corporations with strong credit ratings are viewed as lower-risk borrowers, which places them in a favorable position to secure financing at lower interest rates compared to other entities. This lower risk is reflected in the prime rate, as lenders are more willing to offer favorable terms to borrowers who present a lower likelihood of default.

Other rates mentioned serve different purposes; for example, the discount rate is the interest rate charged by central banks on loans they give to commercial banks and is not directly applicable to corporate borrowing. The Fed Funds Rate is the rate at which banks lend to each other overnight, which also doesn’t specifically apply to unsecured loans for corporations. Lastly, the negotiable certificate of deposit rate typically pertains to time deposits and is not relevant to the context of unsecured corporate loans.