Also found in: Wikipedia.
A benchmark interest rate (such as LIBOR) used to specify conditions of an interest rate swap or an interest rate agreement.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A floating interest rate or other benchmark used in some investment vehicles. For example, in an interest rate swap, the reference rate is the floating interest rate that one of the counterparties is paid. Likewise, in an adjustable-rate mortgage, the reference rate is the floating interest rate that helps determine the interest rate the property owner pays. Usually, the reference rate is LIBOR or some other interest rate that is adjusted on a daily basis.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved