Consider the following statements:1.London Interbank Offered Rate (LIBOR) is based upon the overnight general collateral Treasury repo rate, reflecting the financing cost for treasury securities.2.Secured Overnight Financing Rate (SOFR) comprises the weighted averages of the rates charged in the repo transactions. Select the correct answer form the codes given below:

Q. Consider the following statements:
1.London Interbank Offered Rate (LIBOR) is based upon the overnight general collateral Treasury repo rate, reflecting the financing cost for treasury securities.
2.Secured Overnight Financing Rate (SOFR) comprises the weighted averages of the rates charged in the repo transactions.
Select the correct answer form the codes given below:

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: B

Notes:

Explanation –

Statement 1 is incorrect. SOFR is based upon the overnight general collateral Treasury repo rate, reflecting the financing cost for Treasury securities.

Statement 2 is correct. SOFR comprises the weighted averages of the rates charged in these repo transactions.

Source: ForumIAS

All India Open Test(Simulator X)