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What is LIBOR? Is there any difference between normal interest rates & LIBOR? Is it over the fixed interest rate such as if the actual interest rate is 3% the LIBOR will be calculated as (3% + LIBOR)?
Is it correct that LIBOR is the basic rate of interest used in lending between banks on the London interbank market and also used as a reference for setting the interest rate on other Loans.
Please explain!
Your section paragraph is correct. The interest rate charged on loans to companies will be higher than LIBOR, the extra depending on the credit risk of the company being lent to.
LIBOR is a floating rate and changes from day-to-day. The actual rate charged on loans might be LIBOR + 2% or LIBOR + 3%, or whatever (again depending on the credit risk). In that case the company will be charged 2% more than LIBOR , or 3% more than LIBOR.
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Is LIBOR relevant to the exam? Can we be asked LIBOR in the exam? Any calculation with the LIBOR rate?
Is this all I need to know about LIBOR which u said above?
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