overnight indexed swap: Original post by Ryan Menezes of Demand Media The Federal Reserve Bank of New York sets the effective fed funds rate. http://photos2.demandstudios.com/DM-Resize/photos.demandstudios.com/getty/article/211/40/120064738.jpg?w=700&h=700&keep_ratio=1 Andrew Burton/Getty Images News/Getty Images Banks lend money over long terms at high rates, and obtain money through short-term, low-rate loans.
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