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    Question

    Forward looking term rate recommended by US Alternate

    Rate Risk Committee, as replacement for LIBOR is ______
    A Modified SOFR Correct Answer Incorrect Answer
    B Term SOFR Correct Answer Incorrect Answer
    C Adjusted SOFR Correct Answer Incorrect Answer
    D Compounded SOFR Correct Answer Incorrect Answer
    E Alternate SOFR Correct Answer Incorrect Answer

    Solution

    The secured overnight financing rate (SOFR) is a benchmark interest rate for dollar-denominated derivatives and loans that is replacing the LIBOR. SOFR is a benchmark rate administered by the Federal Reserve Bank of New York (New York Fed) which has been selected to replace USD LIBOR. SOFR itself is a backward-looking overnight rate because it is based on overnight transactions in the U.S. Treasury repo market.

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