Discount: Difference between revisions
imported>Doug Williamson (Add headers.) |
imported>Doug Williamson m (Add category.) |
||
| Line 37: | Line 37: | ||
* [[Premium]] | * [[Premium]] | ||
* [[Spot market]] | * [[Spot market]] | ||
[[Category:Cash_management]] | |||
[[Category:Financial_products_and_markets]] | |||
Revision as of 10:37, 13 March 2019
1. Discount instruments - noun.
In relation to a discount instrument, the discount is the difference between the current market price and the redemption amount.
2. Bonds.
A coupon-paying bond trading in the market at a discount has a market value less than its par value.
3. Foreign currency - forward market.
A currency trading at a discount in the forward foreign exchange market is weaker in the forward market than in the spot market.
4. Verb - financial instruments.
In relation to financial instruments, to exchange an instrument with a future maturity date, for a 'discounted' market value today.
Today's market value being smaller than the redemption amount (receivable at maturity) by the amount of the discount.
5. Verb - discounted cash flow.
In relation to a money amount, to discount is to make smaller.
For example, to discount back a future cashflow to a (smaller) present value in discounted cash flow (DCF) analysis.
