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discount


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1 A deduction from a bill of exchange when it is purchased before its maturity date. The party that purchases (discounts) the bill pays less than its face value and therefore makes a profit when it matures. The amount of the discount consists of interest calculated at the bill rate for the length of time that the bill has to run. See discount market.

2 A reduction in the price of goods below list price, for buyers who pay cash (cash discount), for members of the trade ( trade discount), for buying in bulk ( bulk or quantity discount), for retailers who advertise a manufacturer's product ( promotional discount), etc.

3 The amount by which the market price of a security is below its par value. A £100 par value loan stock with a market price of £95 is said to be at a 5% discount.

4 To change a future value into a present value.

Subjects: Business and Management — Financial Institutions and Services.


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