LIBOR: Difference between revisions
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* [[London InterBank Offered Rate]] | * [[London InterBank Offered Rate]] | ||
* [[Simple interest]] | * [[Simple interest]] | ||
* [[TIBOR]] | |||
* [[Total return swap]] | * [[Total return swap]] | ||
Revision as of 08:39, 20 May 2013
London InterBank Offered Rate, at which the quoting bank offers to lend to other first class banks. LIBOR is widely used as a reference rate. 'LIBOR' is sometimes written 'Libor'.
LIBID means the rate which the quoting bank will pay on funds deposited with it. So LIBOR is the higher rate, and LIBID is the lower rate, by the amount of the spread.
So for example: LIBOR = 5% LIBID = 5% LESS 1/8% = 4 7/8% (= 4.8750%)
LIMEAN is the mid-rate around which the bid-offer prices are built. LIMEAN is the average of LIBOR and LIBID.
For example:
= [5% + 4 7/8%]/2 = 4 15/16% (= 4.9375%).
Short-term LIBOR rates (up to one year) are quoted on a simple interest basis. Longer-term rates (over one year) are quoted as effective annual rates.
