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January 31, 2007
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.
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