If you’ve read financial news in the last few years, you’ve come across the term Libor. Libor is the London InterBank Offered Rate, a key interest rate used by banks for short-term lending with other banks. For those who are fuzzy on the topic, Salman Khan of the Khan Academy explains what Libor is and how it is used.
From this video, you’ll understand:
- How Libor is calculated
- How this differs from the Federal Funds Rate
- Why banks use Libor