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Which of the following correctly defines the term LIBOR?

A. 

Global consumer products inflation rate

B. 

Interest earned by central banks for investing in the United States Treasury bonds

C. 

Benchmark interest rate at which major global banks lend to one another

D. 

The interest rate charged by World Bank to borrowing countries

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Answer with explanation

Answer: Option C

Explanation

The London Interbank Offered Rate (LIBOR) is a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.

It serves as a globally accepted key benchmark interest rate that indicates borrowing costs between banks. The rate is calculated and published each day by the Intercontinental Exchange (ICE).

It is based on five currencies including the U.S. dollar, the euro, the British pound, the Japanese yen, and the Swiss franc.

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