Floating rate: Difference between revisions
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An [[interest rate]] that floats, by reference to inter-bank offered rates, or central bank base rates, or that kind of thing. The [[London Interbank Offered Rate]] — fondly known as [[LIBOR]] — was once the daddy of interest rates, but it has rather fallen upon hard times. | {{a|banking|{{wmc|Frost-covered lifebuoy, Lake Siskiyou.jpg|}}}}{{drop|O|f a borrowing}} arrangement, that the method for resetting its interest rate over its term to maturity references the prevailing market for [[interest rate|interest rates]], rather than something more convoluted (a [[variable rate]], or something more simple (a [[fixed rate]]). | ||
An [[interest rate]] that floats, by reference to inter-bank offered rates, or central bank base rates, or that kind of thing. The [[London Interbank Offered Rate]] — fondly known as [[LIBOR]] — cue [[dramatic look gopher]] — was once the daddy of interest rates, but it has rather fallen upon hard times. | |||
Once thought of as a sleepy corner of the financial markets inhabited by losers who | Once thought of as a sleepy corner of the financial markets inhabited by losers who couldn’t get a job trading anything sexy like [[Credit derivative|credit derivatives]] but, ''boy'' did a few folks who thought that get a surprise in 2012. | ||
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Latest revision as of 11:11, 2 November 2024
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Banking basics
A recap of a few things you’d think financial professionals ought to know
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Of a borrowing arrangement, that the method for resetting its interest rate over its term to maturity references the prevailing market for interest rates, rather than something more convoluted (a variable rate, or something more simple (a fixed rate).
An interest rate that floats, by reference to inter-bank offered rates, or central bank base rates, or that kind of thing. The London Interbank Offered Rate — fondly known as LIBOR — cue dramatic look gopher — was once the daddy of interest rates, but it has rather fallen upon hard times.
Once thought of as a sleepy corner of the financial markets inhabited by losers who couldn’t get a job trading anything sexy like credit derivatives but, boy did a few folks who thought that get a surprise in 2012.