Interest Rates

[maher98]

Is FED or LIBOR insterest rate is on reducing basis or flat rate?

[factor-fiction]

I'm not sure what you are asking. The rate is the true rate

[maher98]

What I mean that current LIBOR is at 1.92% this week. If someone takes a loan of 100,000 for 1 year, will the interest calculation be as follows:
100,000 * 1.92% = 1,920 which is flat rate OR
100,000 * (1.92% / 1.68) = 1,000 which is reducing rate. The same goes for FED rate.

Hope I've clarifed my question.

[dzug]

Still clear as mud.

Where does 1.68 come from?

[maher98]

Pls check this site for LIBOR rates
http://www.bankrate.com/rates/interest-rates/l ibor.aspx

Hope you can clarify.

[dasherman]

The LIBOR is the interest rate banks charge for lending money to each other,not to the general public.

[dzug]

Yes I've had a look at that site - it still doesn't help to understand the question.

One possible answer is that it's up to the parties to the loan to decide how the interest rate (which is just a figure) is applied in their particular case. Well normally the lender would stipulate it.