1) a number used to compute the interest rate for an adjustable rate mortgage (arm). the index is generally a published number or percentage, such as the average interest rate or Yield on treasury bills. a margin is added to the index to determine the interest rate that will be charged on the arm. this interest rate is subject to any caps that are associated with the mortgage. 2) used to set interest rates, such as the six month treasury bill rate. (also see: index rate)
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