DEFINITION of 'Absolute Rate'
The fixed portion of an interest-rate swap, expressed as a percentage rather than as a premium or a discount to a reference rate.
INVESTOPEDIA EXPLAINS 'Absolute Rate'
The absolute rate is a combination of the reference rate and the premium or discounted fixed percentage. For example, if the LIBOR is 3% and the fixed interest portion of the swap is at a 7% premium, the absolute rate is 10%.
It is sometimes also referred to as an absolute swap yield.
LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
An agreement between two parties (known as counterparties) where ...
1. The total cost of an option. 2. The difference between the ...
Traditionally, the exchange of one security for another to change ...
The condition of the price of a bond that is lower than par. ...
A standard agreement used in over-the-counter derivatives transactions.