From ACT Wiki
Jump to navigationJump to search
The printable version is no longer supported and may have rendering errors. Please update your browser bookmarks and please use the default browser print function instead.

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.

See also