DEFINITION of 'Absolute Rate'
The fixed portion of an interestrate 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.
RELATED TERMS

LIBOR
LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ... 
Interest Rate Swap
An agreement between two parties (known as counterparties) where ... 
Premium
1. The total cost of an option. 2. The difference between the ... 
Discount
The condition of the price of a bond that is lower than par. ... 
Swap
Traditionally, the exchange of one security for another to change ... 
Reference Equity
The underlying equity that an investor is seeking price movement ...
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The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >> 
Should you calculate Value at Risk (VaR) for counterparty credit risk?
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Derivatives are securities with prices dependent on one or multiple underlying assets. Common derivatives include forward ... Read Full Answer >> 
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What kinds of derivatives are types of forward commitments?
A derivative is a type of security in which the price of the security is dependent on underlying assets. A derivative could ... Read Full Answer >>
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