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Definition from Nolo’s Plain-English Law Dictionary

A market-sensitive interest rate that determines interest-rate changes on adjustable-rate mortgages and other variable rate loans. Common indices include the six-month London Interbank Offered Rate (LIBOR), the Federal Home Loan Bank 11th District Cost of Funds (COFI), and the prime rate as listed in The Wall Street Journal.

Definition provided by Nolo’s Plain-English Law Dictionary.