The interest rate paid on Eurodollar deposits is:
LIBOR
The interest rate paid on Eurodollar deposits is the rate at which banks borrow and lend US dollars outside of the United States. It is called Eurodollar because it originated as US dollars deposited in European banks, but it has since evolved to include US dollar deposits in banks all around the world.
The Eurodollar interest rate is usually quoted as a percentage on an annual basis, and it varies depending on supply and demand factors, such as market conditions, economic growth, inflation, and geopolitical events. The rate is typically tied to the London Interbank Offered Rate (LIBOR), which is the benchmark interest rate at which banks lend to one another in the Eurodollar market.
Investors, corporations, and governments use Eurodollar deposits as a way to diversify their holdings and manage risk. They can earn a higher yield on their US dollar deposits than they would in their home countries, and they don’t have to worry about currency exchange rate fluctuations that can erode their returns. Conversely, banks use Eurodollar deposits to fund their operations and generate income from lending activities.
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