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

question 35

Multiple Choice

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.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to supply a good for and the actual amount received by them when they make the sale.

Consumer Surplus

The divergence between the expected payment by consumers for a product or service and the actual payment made.

Producer Surplus

The difference between the amount producers are willing and able to supply goods for versus the amount they actually receive due to market prices.

Total Surplus

The sum of consumer surplus and producer surplus, representing the total net gain to society from the production and consumption of goods and services.