What’s LIBOR and for what is used
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What is LIBOR? The base interest rate banks use to lend to each other. Essentially its the interest rate on a loan assuming absolutely zero risk.
What is it used for? ALL loans use this rate as the base rate. You can see loans offered at LIBOR + 2%. This 2% is the “risk” that the loan giver is suffering by not lending the money to a risk free institution such as a bank.
Yes banks aren’t actually risk free but they pretend they are for this to work.
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