FINANCIAL MANAGEMENT assignments 1-4 Essay Example | Topics and Well Written Essays - 500 words

FINANCIAL MANAGEMENT assignments 1-4 - Essay Example It is an indispensable tool for the economists, investors and analysts to measure the well-being of an economy. Real GDP is different from nominal GDP as it takes into account the inflation, thus producing a better scale of measurement. 2) Define and indicate the significance of the LIBOR. What was the LIBOR at the time you completed the assignment? LIBOR is the London Interbank Offered Rate and it is the rate at which the most creditworthy banks lend funds to each other. It is considered as a benchmark rate in the major countries of the world such as US, UK and Canada. LIBOR is considered as of paramount importance in the corporate world because when the LIBOR increases it creates a financial panic, which tightens the flow of credit and erodes the trust between the banks for their ability to pay each other. In addition to that, all the credit loans such as credit card, mortgages and student loans are dependent on LIBOR therefore it has a direct impact on the consumers. It is estimat ed that $360 trillion of international financial products are based on LIBOR (Reynolds, 2010). Current LIBOR LIBOR 1-Month 3-Months 6 Months 0.26% 0.31% 0.46% Source: LIBOR, other interest rate indexes (Bankrate.com) 3) Define and indicate the significance of the prime rate.