January 31,2007
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LIBOR
LIBOR is a standard financial index that can be found in the Wall Street Journal. It stands for London Interbank Offered Rate, and stands for the interest rate at which banks in wholesale money markets offer to lend each other money. It is on a par with the prime rate, although, historically, it changes much less than prime.
As LIBOR is a measure for resetting rates on securities with adjustable rates, it can be used to set the cost of credit card and adjustable rate mortgage loans. In this way, it is used as an alternative to the prime rate. There are several of these indicators, and while Americans may know prime best, LIBOR is considered another major player in the financial world.