The London Interbank Offered Rate (LIBOR)
A) competes with the U.S. Prime Rate for those companies with an international presence.
B) has been lower than the U.S. Prime Rate for at least the last decade.
C) is an estimate of the interbank lending rate for London banks.
D) all of these options are correct.

Question

Quizplus · Accepted Answer

Option A is correct as companies with international presence can choose between LIBOR and the U.S. Prime Rate to determine their borrowing costs. Option B is incorrect as the LIBOR has not consistently been lower than the U.S. Prime Rate. Option C is correct as LIBOR is an estimation of the average interest rate at which major London banks lend to one another. Therefore, option D is correct as all options are correct.