A reference rate is a rate that determines pay-offs in a financial contract and that is outside the control of the parties to the contract. It is often some form of LIBOR rate, but it can take many forms, such as a consumer price index, a house price index or an unemployment rate. Parties to the contract choose a reference rate that neither party has power to manipulate.
Read more about Reference Rate: Examples of Use, Reference Rates For Short Term Interest Rates
Famous quotes containing the words reference and/or rate:
“The common behavior of mankind is the system of reference by means of which we interpret an unknown language.”
—Ludwig Wittgenstein (1889–1951)
““Terence, this is stupid stuff:
You eat your victuals fast enough;
There can’t be much amiss, ‘tis clear,
To see the rate you drink your beer.”
—A.E. (Alfred Edward)