AFMP4
Syllabus E. Treasury And Advanced Risk Management Techniques E3. The use of financial derivatives to hedge against interest rate risk

LIBOR and LIBID 4 / 13

LIBOR

means the London inter-bank offered rate.

It is the rate of interest at which a top-level bank in London can borrow wholesale short-term funds from another bank in London money markets.

LIBID

means the London inter-bank bid rate.

It is the rate of interest that a top- level bank in London could obtain short-term deposits with another bank in London money markets.

The LIBID is always lower than the LIBOR