LIBOR

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.

See also

• Base rate
• Cost-plus loan pricing
• Effective annual rate
• EURIBOR
• euro LIBOR
• Eurocredit
• Floating rate note
• Forward rate agreement
• London inter-bank mean rate
• London Interbank Bid Rate
• London InterBank Offered Rate
• Simple interest
• TIBOR
• Total return swap