The most common short-term interest rate used in the swap market is
A)the U.S.discount rate.
B)the U.S.prime rate.
C)the U.S.fed funds rate.
D)LIBOR.

Question

Quizplus · Accepted Answer

LIBOR (London Interbank Offered Rate) is the most common short-term interest rate used in the swap market. It is an average of interest rates that major banks charge each other for borrowing money in the London interbank market. The other options (discount rate, prime rate, and fed funds rate) are all short-term interest rates, but they are not commonly used in the swap market.

The Most Common Short-Term Interest Rate Used in the Swap