EURIBOR and Opportunity cost: Difference between pages

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(Euro Interbank Offered Rate)
The expected return that is foregone by investing in a project, rather than in the next best use of capital or other resources.


Sponsored by the European Banking Federation ([http://www.euribor-ebf.eu/ EBF]),  EURIBOR® is a formal benchmark or reference interest rate since 30 December 1998.
It is the opportunity cost of capital and other resources that is the relevant economic measure for financial decision making purposes.
 
It estimates the all-in, simple interest rate (including credit premium and liquidity premium) at which euro denominated interbank term deposits for spot value (T+2) are offered within the euro-zone by one prime bank to another prime bank in the period before 10.45 CET each business morning.
EURIBOR is calculated for periods ranging from one day to one year. It is quoted to three decimal places and on an actual/360 day-count.
 
==Contributing rate estimates==
 
The panel of banks contributing to Euribor is (September 2013) made up of 32 banks though it has been larger in the past.
 
The banks submit their estimate, to two decimal places, of the rate "at which euro interbank term deposits are being offered within the Eurozone by one prime bank to another at 11.00 a.m. Brussels time ("the best price between the best banks")". This is similar to the question for [[LIBOR]] contributing banks prior to reform of LIBOR in 1998 to improve accountability of contributing banks for the submitted rate.
 
The EBF publish a [http://www.euribor-ebf.eu/assets/files/Euribor_code_conduct.pdf code of conduct] for contributing banks
 
==Euribor calculation==
 
In calculating the Euribor from the submitted rates, the highest and lowest 15% of submitted rates are ignored and the central 70% remaining is averaged and published to 3 decimal places.
 
Thomson Reuters is the screen service provider responsible for computing and also publishing Euribor.
 
The Euribor process is overseen by a [http://www.euribor-ebf.eu/euribor-org/steering-committee.html Steering Committee].




== See also ==
== See also ==
* [[Benchmark]]
* [[Cost of capital]]
* [[EONIA]]
* [[Opportunity cost of capital]]
* [[InterBank Offered Rate]]
* [[Production possibility curves]]
* [[LIBOR]]
* [[Supernormal profit]]
* [[TIBOR]]

Revision as of 11:05, 22 June 2016

The expected return that is foregone by investing in a project, rather than in the next best use of capital or other resources.

It is the opportunity cost of capital and other resources that is the relevant economic measure for financial decision making purposes.


See also