Definition
The minimum interest rate investors will accept for investing in a non-Treasury security. In general, this is the yield that is being earned on the most recent on-the-run Treasury security of similar maturity plus a premium. Also called base interest rate------------------------------------------------------------------------------------------------------
A benchmark interest rate is a standard rate against which something is measured. Three example are: the Federal Funds Rate, set by the Federal Reserve Board; the prime rate, which is set by banks; LIBOR, which is the London Interbank Offer Rate.
Benchmark interest rates are used to calculate adjustable rate mortgages or other variable loans.
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