Discount

1. Noun. In relation to a discount instrument, the difference between the current market price and the redemption amount.

1. A coupon bond trading in the market at a discount has a market value less than its par value.

1. A foreign currency trading at a discount in the forward foreign exchange market is weaker in the forward market than in the spot market.

1. Verb. In relation to a money amount, make smaller. For example, to discount back a future cashflow to a (smaller) present value.

1. Verb. 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.

See also

• Coupon bond
• Discount instruments
• Premium
• Spot market