LIBOR is the LONDON INTERBANK OFFERING RATE. It is the rate at which one bank gives a loan to another bank. It is generally calculated for five major currencies (US$, EUR, GBP, JPY, CHF) for seven periods - 1d, 1week, 1m, 2m, 3m, 6m, 12m.
For example, 6m LIBOR = 8%/8.5% means that Bank is willing to receive 6m deposits at 8% p.a. Bank is willing to give out 6m loans at 8.5% p.a.
LIBOR is calculated everyday as an average of all the rates quoted by all the Banks (except the lowest and highest quotation).
LIBOR - London Interbank Offered Rate MIBOR - Mumbai ....... etc.
For exam purpose remember, 6mL = 8% doesn't mean Annualised Interest is 16%. 8% is per annum. So while calculating use [8/100 x 6/12]
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