Quick Definition

LIBOR is a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.

Examples

• 1A bank uses LIBOR as a base rate to set interest rates for variable-rate loans.
• 2Investors and analysts monitor LIBOR rates to gauge the health of the banking sector.
• 3Financial derivatives like interest rate swaps often reference LIBOR to determine payment obligations.
• 4Mortgage lenders may tie adjustable-rate mortgage rates to LIBOR, affecting monthly payments for homeowners.

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