Question: 1. What is an interest reference rate and how is it used to set rates for individual borrowers? b. LIBOR is quoted overnight, 1 week,

1. What is an interest "reference rate" and how is it used to set rates for individual borrowers?

b. LIBOR is quoted overnight, 1 week, 1 month, 2 months and so on through 12-month maturities. However, because of the widespread use in various loans and derivative agreements for individual borrowers, the 1-month, 3-month, and 6-month LIBOR are the most significant maturities (Eiteman, 2018). These interest reference rates determine when individual borrowers should purchase a home or deposit money into the bank. When interest rates are higher there is less borrowing and the lower the interest rates the more borrowing.

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