Absolute Rate

What Does Absolute Rate Mean?
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.

Filed Under: Forex

Related Terms

Discount
Interest Rate Swap
LIBOR
Premium
Swap
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