The Most Common Short Term Interest Rate Used in the Swap

question 7

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.
• E)None of the options

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Definitions:

Investment

The allocation of resources, usually money, in expectation of generating income or profit.

Interest

The cost of borrowing money, usually represented as a percentage of the principal loan amount.

Loan

An amount of money that is lent to someone, which is expected to be paid back with interest.

Interest

The cost of borrowing money, typically expressed as an annual percentage of the principal amount.