Index Funds
Should you invest in Index Funds instead of other types of investments?
A great question!
Read this article... and draw your own conclusions!!!!
Sunday, February 17, 2008
Saturday, February 9, 2008
Prime Rate vs. LIBOR
The Prime Rate is the interest rate or discount rate, calculated differently by each lender, announced by North American commercial banks for their most credit worthy, largest and most preferred commercial customers having the highest credit ratings, high enough that there is little risk to the lender in making a loan, for short term unsecured loans, as determined by market forces affecting a bank's cost of funds and the rates the borrowers will accept.
Most lenders are careful to disclose that the "prime rate" is a standard benchmark and not necessarily the best rate offered by the lender. In actual practice, the most credit worthy corporate customers get a rate lower than this. The Prime Rate is a yardstick for trends in interest rates in general, and it is often a baseline for establishing interest rates on high risk loans. The prime rate is known to change, but not on a regular basis.
LIBOR, the British Banking Association's London Interbank Offered Rate, is an average of the interest rates that major international banks charge each other to borrow US dollars in the London money market. The reason that extra loan points are typically charged for LIBOR based loans as compared to Prime Rate denominated loans is that LIBOR is a wholesale rate charged between banks themselves, while Prime Rate loans are retail loans posted for corporate customer transactions.
The Prime Rate is the interest rate or discount rate, calculated differently by each lender, announced by North American commercial banks for their most credit worthy, largest and most preferred commercial customers having the highest credit ratings, high enough that there is little risk to the lender in making a loan, for short term unsecured loans, as determined by market forces affecting a bank's cost of funds and the rates the borrowers will accept.
Most lenders are careful to disclose that the "prime rate" is a standard benchmark and not necessarily the best rate offered by the lender. In actual practice, the most credit worthy corporate customers get a rate lower than this. The Prime Rate is a yardstick for trends in interest rates in general, and it is often a baseline for establishing interest rates on high risk loans. The prime rate is known to change, but not on a regular basis.
LIBOR, the British Banking Association's London Interbank Offered Rate, is an average of the interest rates that major international banks charge each other to borrow US dollars in the London money market. The reason that extra loan points are typically charged for LIBOR based loans as compared to Prime Rate denominated loans is that LIBOR is a wholesale rate charged between banks themselves, while Prime Rate loans are retail loans posted for corporate customer transactions.
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