Abstract: At its simplest, an interest rate is the rate that is charged or paid for the use of money. It is often expressed as an annual percentage of the notional amount. Throughout the text we will generally focus on what are known as ‘interbank rates’. These are the interest rates at which banks borrow from and lend to each other in the interbank, or over-the-counter (OTC) market. The most important example of an interbank rate is the London Interbank Offered Rate, or LIBOR. The LIBOR rate is the interest rate at which banks offer to lend unsecured funds to each other in the London wholesale money market. Another related market rate is the swap rate, which is the fixed rate that a bank is willing to exchange for a series of payments based on the LIBOR rate.
Publication Year: 2015
Publication Date: 2015-05-31
Language: en
Type: book-chapter
Indexed In: ['crossref']
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