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Why is the libor always higher than the libid?

Anonymous

∙ 12y ago

Updated: 9/17/2023

Libor is London Inter-bank Offer Rate and Libid is London Inter-bank Bid Rate. Libor is always higher than Libid. If banks use Libor to lend (ask) and Libid to buy (bid) how come that while one bank expects to get a higher rate while lending hope to get a lower rate while borrowing? While one bank buys the other sells; while it is a bid rate to one it is offer rate to the other! How is it that this market function? Is it because the bid rate is expected to decrease within a day and the offer rate expected to increase simultaneously to keep-up with the margins in the inter-bank market?

Wiki User

∙ 12y ago

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Continue Learning about Math & Arithmetic

Is LIBOR normally higher or lower than the US prime interest rate?

It is normally higher than the US prime interest rate.

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Related Questions

What is the full form of libor?

The London Interbank Offered Rate (or LIBOR, pronounced /ˈlaɪbɔr/) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market). LIBOR will be slightly higher than the London Interbank Bid Rate (LIBID), the rate at which banks are prepared to accept deposits.

Is LIBOR normally higher or lower than the US prime interest rate?

It is normally higher than the US prime interest rate.

What are the key differences between the LIBOR and Prime interest rates, and how do they impact borrowing costs for consumers and businesses?

The key difference between LIBOR and Prime interest rates is that LIBOR is an international benchmark rate based on the rates at which banks lend to each other, while the Prime rate is set by individual banks and is typically tied to the federal funds rate. LIBOR tends to be higher than the Prime rate, which means borrowing costs for consumers and businesses linked to LIBOR will be higher. This can impact the cost of mortgages, student loans, and other financial products tied to LIBOR. On the other hand, the Prime rate directly affects the interest rates on credit cards, home equity lines of credit, and other loans tied to it. Overall, fluctuations in these rates can impact borrowing costs for consumers and businesses, making it important to monitor and understand how they are changing.

12 percent per annum and 2 percent above libor which is favorable?

"2% above Libor" would mean a percentage that is 2 percent more than the Libor rate. You would have to get the current rates (there are different rates for different conditions), add 2%, and then compare.

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