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.
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.
LIBOR or ICE LIBOR (previously BBA LIBOR) is a benchmark rate ...
A rate applicable to a financial transaction that will take place ...
The amount charged, expressed as a percentage of principal, by ...
The current price at which a particular security can be bought ...
A trading strategy in which an investor buys a long position ...
A standard agreement used in over-the-counter derivatives transactions.