Q. With reference to London Inter-Bank Offered Rate (LIBOR) consider the following statements:
1.It is a benchmark interest rate at which major global banks lend to one another in the international interbank market for long-term loans.
2.Rupee is one of the currencies on which LIBOR is based on.
3.The Secured Overnight Financing Rate (SOFR) is a benchmark interest rate for dollar-denominated derivatives and loans that is replacing the London Interbank Offered Rate (LIBOR).
Which of the statements given above is/are correct?
Answer: D
Notes:
Explanation –
Statement 1 and 2 are incorrect. LIBOR is a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans. LIBOR is based on five currencies including the U.S. dollar, the euro, the British pound, the Japanese yen, and the Swiss franc, and serves seven different maturities.
Statement 3 is correct. The Secured Overnight Financing Rate (SOFR) is a benchmark interest rate for dollar-denominated derivatives and loans that is replacing the London Interbank Offered Rate (LIBOR).
Source: ForumIAS
