Which rate is the interbank offered rate among major banks for short-term lending?

• A. EURIBOR
• B. SOFR
• C. PRIME RATE
• D. LIBOR

Answer: (D)

LIBOR stands for the London Interbank Offered Rate. It is the rate at which major banks lend to each other in the interbank market for short‑term funding across currencies, and it has historically served as a global benchmark for pricing a wide range of loans and derivatives. The other options don’t fit as the primary interbank benchmark: SOFR is a secured, overnight rate based on repurchase agreements in the U.S. dollar, not an unsecured interbank rate; the prime rate is the rate banks charge their best corporate borrowers, not a lender-to-lender rate; EURIBOR is the euro-area counterpart, specific to euro transactions. So LIBOR best matches the idea of the interbank offered rate among major banks for short-term lending.