Open-Market Rate

AAA

DEFINITION of 'Open-Market Rate'

Rate of interest that is paid on any debt security that trades in the open market. Open-market rates respond directly to changes in supply and demand. Interest rates for such debt instruments as commercial paper and banker's acceptances are open-market rates.

INVESTOPEDIA EXPLAINS 'Open-Market Rate'

Open-market rates differ from the discount rate and other official rates that are set by the Federal Reserve. These rates apply to any debt instrument that trades in the secondary market. Bank commercial-loan rates do not fall into this category, as they are largely determined by Fed policy.

RELATED TERMS
  1. Discount Rate

    The interest rate charged to commercial banks and other depository ...
  2. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  3. Federal Reserve Board - FRB

    The governing body of the Federal Reserve System. The seven members ...
  4. Interest

    1. The charge for the privilege of borrowing money, typically ...
  5. Personal Finance

    All financial decisions and activities of an individual, this ...
  6. Prime Rate

    The interest rate that commercial banks charge their most credit-worthy ...
Related Articles
  1. Forces Behind Interest Rates
    Economics

    Forces Behind Interest Rates

  2. What Investors Should Know About Interest ...
    Investing Basics

    What Investors Should Know About Interest ...

  3. Dividends, Interest Rates And Their ...
    Options & Futures

    Dividends, Interest Rates And Their ...

  4. Interest Rates And Your Bond Investments
    Investing Basics

    Interest Rates And Your Bond Investments

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center