- LIBOR (London InterBank Offered Rate)
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is the rate on dollar-denominated deposits, also know as Eurodollars,
traded between banks in London. The index is quoted for one month,
three months, six months as well as one-year periods.
is the base interest rate paid on deposits between banks in the
Eurodollar market. A Eurodollar is a dollar deposited in a bank
in a country where the currency is not the dollar. The Eurodollar
market has been around for over 40 years and is a major component
of the International financial market. London is the center of the
Euromarket in terms of volume.
LIBOR rate quoted in the Wall Street Journal is an average of rate
quotes from five major banks. Bank of America, Barclays, Bank of
Tokyo, Deutsche Bank and Swiss Bank.
most common quote for mortgages is the 6-month quote. LIBOR's cost
of money is a widely monitored international interest rate indicator.
LIBOR is currently being used by both Fannie Mae and Freddie Mac
as an index on the loans they purchase.
is quoted daily in the Wall Street Journal's Money Rates and compares
most closely to the 1-Year Treasury Security index.
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