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Rabu, 03 Desember 2008

London Interbank

London Interbank Offered Rate, or better known by the acronym LIBOR is a daily reference exchange rate of the interest rate offered in the provision of loans without collateral by a bank to other banks in the London money markets (or inter-bank money market). Libor is the reverse of the London Interbank Bid Rate (libid).
Use of

Exchange rate of LIBOR interest rates are widely used as a reference exchange rate for a financial instrument, such as for example in:

* A contract exchange rate or better known by the name of a forward rate agreement (fra)
* Trade exchange rate to be short-term interest rates
* Interest rate swap
* Recognition of the debt or the interest rate float better known by the name "floating rate note (FRN)
* Credit syndication
* Adjustable rate mortgage that is interest rate adjustments in the housing loan business after a period of time that generally use a benchmark reference exchange rate
* Exchange rates, especially U.S. dollars (see also Eurodollar).

Products using the market exchange rate basis the most active and liquid in the world.

For Euro, the reference exchange rate that is usually used Euribor issued by the European Banking Federation (European banking federation).

Technical features

LIBOR is published by the British Bankers Association (BBA) each day after 11:00 hours London time, which is the average interest rate of bank deposits among several banks chosen, for a period of the loan atara 1 night up to one year. Short-term interest rates for example, up to 6 months is almost reflection of market conditions at that time. Interest rate on loans between banks is changing every day.

The exchange of reference issued in addition to United States dollars (USD) for the Pound Sterling. LIBOR is also a reference that is meaningful for other currencies, including Swiss Francs (CHF), yen, Canadian dollar (CAD) and the Danish Krone.

Derivatives, which refers to the LIBOR

Eurodollar contract

Eurodollar contract trading on the Chicago Mercantile Exchange (stock measure of Chicago) is based on the exchange rate of USD LIBOR loan with a term of 3 months. This is the exchange of short-term interest rate behavior that most traded stock in the measure. For a period of more short, this type of contracts traded in London at the time of Euronext.liffe Europe and the Singapore Exchange in Asian time.

Interest rate swap

Interest rate swap or Interest Rate Swaps, which refers to the short-term exchange rate of LIBOR is currently traded on the inter-bank money market to the maturity of up to over 50 years. Interest rate "LIBOR 5 years" refers to the exchange rate swap 5 years old that exchanged rate of LIBOR swap of 3 or 6 months.

Source : id.wikipedia.com

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