ICMA Exam FMFQ Topic 2 Question 48 Discussion

Actual exam question for ICMA's FMFQ exam

Question #: 48
Topic #: 2

[All FMFQ Questions]

Which of the following best describes LIBOR?

AThe average rate at which wholesale bank deposits have taken place over the past 24 hours (since the last LIBOR fix)

BThe average rate at which wholesale banks are offering one another money at fixing time

CThe highest rate at which wholesale banks are offering one another money at fixing time

DThe average rate at which wholesale banks have offered money to their customers over the past 24 hours (since the last LIBOR fix)

Show Suggested Answer

Suggested Answer: C

by Janine at Dec 23, 2023, 09:18 PM

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Sherita

4 days ago

Option B is the way to go. LIBOR is like the secret handshake of the banking world - you gotta know the insider lingo!

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Novella

8 days ago

I'm not sure, but I think it might be A) The average rate at which wholesale bank deposits have taken place over the past 24 hours. Can someone explain why it's not this option?

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Leontine

10 days ago

Hmm, Option D sounds tempting, but that's probably just the retail rates. LIBOR is definitely about the wholesale, interbank market. Option B is the way to go.

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Nu

10 days ago

I agree with Glendora. LIBOR is the rate at which banks lend to each other, so it makes sense that it would be the average rate at fixing time.

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Glendora

12 days ago

I think the answer is B) The average rate at which wholesale banks are offering one another money at fixing time.

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Alysa

16 days ago

I'm going with Option B. LIBOR is all about the wholesale lending rates between banks, not what they offer to their customers directly.

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Cordie

16 days ago

I'm not sure, but I think it might be A) The average rate at which wholesale bank deposits have taken place over the past 24 hours. Can someone explain why it's not this option?

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Alverta

17 days ago

I agree with Callie, because LIBOR is the London Interbank Offered Rate, so it makes sense that it represents the rate at which banks offer money to each other.

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Ramonita

17 days ago

I was thinking Option A, but now that I think about it, that's probably just the daily volume of interbank lending, not the actual rates. Option B makes more sense.

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Callie

18 days ago

I think the answer is B) The average rate at which wholesale banks are offering one another money at fixing time.

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Krystal

18 days ago

Option B sounds like the correct description of LIBOR. It's the average rate at which banks lend to each other, which is a key benchmark for many financial instruments.

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