Libor curve refers to a graph representing different maturities of London Interbank Offered Rate (LIBOR).
LIBOR is like a agreed upon benchmark floating rate which is used for interbank lending by banks with high credit ratings. The LIBOR curve represents short-term periods of less than one year.
The LIBOR curve is a proxy for the risk free rates like the treasury curve. Libor curve has the following uses:
1. Interest rate swaps
2. Predicting long term interest rates
3. Acting as a near proxy for risk free lending rates
4. Helps in measuring the risk return trade off for other short term instruments.
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