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LIBOR


It stands for the London Interbank Offered Rate, i.e., the interest rate at which banks borrow funds from each other, in marketable size, in the London interbank market. This rate, a resetting rate or floating rate, is widely used by banks and financial institutions to price their products and calculate funding costs. Loans and debt instruments are usually traded using LIBOR as benchmark for calculation of interest payments.

Some interest rate futures contracts such as Eurodollar futures are cash settled based on LIBOR. LIBOR is also used for swaps (interest rate swaps) on the floating leg.

The British Bankers Association publishes LIBOR rates on a daily basis.



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Banking is an integral part of the modern financial system and plays an important role in an economy. It basically involves the so-called intermediation (e.g., ...
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