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Lets say that weve got company A over here, and it takes out a $1 million loan, and it pays a variable interest rate on that loan. It pays LIBOR plus 2%. And LIBOR stands for London Interbank Offer Rate. Its one of the major benchmarks for variable interest rates. And so it pays that to some lender. This is the person who lent company A the money. It pays them a variable interest rate every period. So for example, in period one if LIBOR is at 5%, then in that period, company A will pay 7%, or $70,000 to the lender in that period. In period two, if LIBOR goes, lets say LIBOR goes down a little bit to 4%, then company A is going to pay 4 plus 2, which is 6%, which is $60,000 in interest. Lets say that we have another company, company B, right over here. It also borrows $1 million, but it borrows it at a fixed rate. Lets say it borrows it at a fixed rate of 8%. So in each period, regardless of what happens to LIBOR or any other benchmark-- so this is to probably another lender, or d
