The discount rate can mean
- an interest rate a central bank charges depository institutions that borrow reserves from it, for example for the use of the Federal Reserve's discount window.
- the same as interest rate; the term "discount" does not refer to the common meaning of the word, but to the meaning in computations of present value, e.g. net present value or discounted cash flow
- the annual effective discount rate, which is the annual interest divided by the capital including that interest; this rate is lower than the interest rate; it corresponds to using the value after a year as the nominal value, and seeing the initial value as the nominal value minus a discount; it is used for Treasury Bills and similar financial instruments
Read more about Discount Rate: Annual Effective Discount Rate, Business Calculations
Famous quotes containing the words discount and/or rate:
“Don’t discount our powers;
We have made a pass
At the infinite,”
—Robert Frost (1874–1963)
“You are more than entitled not to know what the word ‘performative’ means. It is a new word and an ugly word, and perhaps it does not mean anything very much. But at any rate there is one thing in its favor, it is not a profound word.”
—J.L. (John Langshaw)