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Commercial Paper Rate


Though LIBOR rate is the most commonly used floating rate in fixed-for-floating interest rate swaps, other rates also are occasionally used. The most prominent among these rates is the commercial paper rate. Sometimes, floating-for-floating swaps are also entered into where companies are willing to hedge exposure in cases assets and liabilities are subject to different floating rates. For instance, two counterparties might agree to exchange the 3-month commercial paper rate plus 20 basis points for 3-month LIBOR, with both rates being applied to the same principal amount.

For further details, see CP rate (banking).



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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