imported>Doug Williamson |
imported>Doug Williamson |
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| 1.
| | The term ''risk free'' refers to theoretical assets on which the risk free rate of return is earned. |
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| The quoted market return for traded instruments quoted at a discount. | |
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| The market discount rate is quoted based on a percentage of the ''maturity amount''.
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| (This is different from a yield or interest rate, which is conventionally quoted based on a percentage of the ''starting amount''.)
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| In the US this is also known as a 'discount yield'.
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| 2.
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| Cost of capital.
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| The yield used to calculate discount factors and present values.
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| 3.
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| The rate used to discount future liabilities of a Defined benefit pension scheme in order to calculate the present value of the liabilities, often for the purpose of comparing them with the market value of the scheme’s assets.
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| Historically it was common to use the blended rate of investment return expected on the actual assets in the scheme, but typically now a market rate is used, such as the government bond or AA corporate bond yield for a fixed income security with a similar duration to that of the underlying liabilities.
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| 4.
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| In the US, the interest rate that member banks pay the Federal Reserve when the banks use securities as collateral. The discount rate acts as a benchmark for interest rates issued.
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| Other central banks also have similar discount rates.
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| == See also == | | == See also == |
| * [[CertFMM]] | | * [[Risk free rate of return]] |
| * [[Cost of capital]]
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| * [[Discount]]
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| * [[Discount basis]]
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| * [[Discount instruments]]
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| * [[Discounted cash flow]]
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| * [[Interest rate]]
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| * [[Monetary policy]]
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| * [[Periodic rate]]
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| * [[Yield]]
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| ===Other links===
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| [http://www.treasurers.org/node/8837 Students: Triumph with timelines, The Treasurer, March 2013]
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| | [[Category:Long_term_funding]] |
| | [[Category:Corporate_finance]] |
| | [[Category:Corporate_finance]] |
| [[Category:Corporate_finance]] | | [[Category:Corporate_finance]] |
| | [[Category:Manage_risks]] |
