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| This term can refer either to the cash flows of an instrument (Discount instruments) or to its basis of market quotation (Discount rate).
| | ''Economics''. |
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| For example when an instrument is quoted - on a <u>discount basis</u>, one period before its maturity - at a discount of 10% per period, this means that it is currently trading at a price of 100% LESS 10% = 90% of its terminal value.
| | Where the real wage is above the equilibrium level and aggregate supply of labour exceeds aggregate demand for labour. |
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| (The periodic ''yield'' on this instrument is 10%/90% = 11.11%. So if the same instrument had been quoted on a <u>yield basis</u>, then the quoted yield per period = 11.11%.)
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| The relationship between the periodic discount rate (d) and the periodic yield (r) is:
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| r = d/[1-d]
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| So in this case:
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| r = 0.10/[1 - 0.10 = 0.90]
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| = 11.11%
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| == See also == | | == See also == |
| * [[Discount instruments]] | | * [[Equilibrium]] |
| * [[Discount rate]] | | * [[Equilibrium unemployment]] |
| * [[Sterling commercial paper]]
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| * [[US commercial paper]]
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| * [[Yield basis]]
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| | [[Category:The_business_context]] |
Latest revision as of 15:11, 4 September 2019
Economics.
Where the real wage is above the equilibrium level and aggregate supply of labour exceeds aggregate demand for labour.
See also
