Implied Rate

Filed Under »
Dictionary Says

Definition of 'Implied Rate'

An interest rate that is determined by the difference between the spot rate and the forward/futures rate. The degree of relative costliness of a future rate can be assessed by comparing the implied rate with the spot rate.

Calculated as:

Implied Rate
Investopedia Says

Investopedia explains 'Implied Rate'

For example, if the present spot rate of LIBOR is 5% and the forward rate for LIBOR is 6%, the implied rate is 1%. This situation merits the impression that the future rate for borrowing will be more expensive.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. London Interbank Offered Rate - LIBOR

    An interest rate ...
  2. Interest Rate

    The amount ...
  3. Spot Price

    The current ...
  4. Forward Rate

    A rate ...
  5. Spot Price

    The current ...
  6. Risk Capital

    Investment funds ...
  7. Futures Contract

    A contractual ...
  8. Futures

    A financial ...
  9. Hong Kong Stock Exchange (HKG) .HK

    One of the ...
  10. Cantor Futures Exchange

    An electronic, ...

Articles Of Interest

  1. Getting Started In Foreign Exchange Futures

    Learn how these futures are used for hedging and speculating, and how they are different from traditional futures.
  2. Futures Fundamentals

    For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them.
  3. Derivatives 101

    Learn how to use this type of investment as an alternative way to participate in the market.
  4. Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.
  5. Investors: Rely On Your Gut

    Find out how your personality and natural instincts can direct your investment choices.
  6. Simplify Your Portfolio

    Faced with an overabundance of choices, many investors forget to stick to the basics.
  7. Hedging With ETFs: A Cost-Effective Alternative

    The benefits of ETFs for hedging are clear and investors of all sizes are taking notice.
  8. Minis Provide Low-Cost Entry To Futures Market

    These contracts provide access to commodities without a huge capital commitment.
  9. Forget The Stop, You've Got Options

    Using options instead of stop-loss orders adds finesse and control in limiting losses.
  10. Offset Risk With Options, Futures And Hedge Funds

    Though all portfolios contain some risk, there are ways to lower it. Find out how.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center