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Discount

• The difference between the par value of a bond and the cost of the bond, when the cost is below par. Some short-term securities, such as T-bills and banker's acceptances, are known as discount securities. They sell at a discount from par, and return the par value to the investor at maturity without additional interest. Other securities, which have fixed coupons, trade at a discount when the coupon rate is lower than the current market rate for securities of that maturity and/or quality.

• Is the negative differential against the spot price. It can refer to an interest rate, price difference, amount under par, or other similar relationship.

• The amount by which a bond sells at a value that is less than its par, or face, value.

• The difference between the lower price paid for a security and the security's face amount at issue. See also: Premium.

• Referring to the selling price of a bond, a price below its par value. Related: premium.

 
 Embedded terms in definition
 Banker's acceptance
Bond
Coupon rate
Coupon
Discount securities
Interest rate
Interest
Investor
Issue
Its
Market
Maturity
Par value
Par
Premium
Return
Securities
Security
Sell
Spot price
Trade
Without
 
 Referenced Terms
 Accretion of a discount: In portfolio accounting, a straight-line accumulation of capital gains on Discount bonds in anticipation of receipt of par at maturity.In portfolio accounting, a straight-line accumulation of capital gains on Discount bond in anticipation of receipt of par at maturity.

 Accretion of a discount: In portfolio accounting, a straight-line accumulation of capital gains on Discount bonds in anticipation of receipt of par at maturity.In portfolio accounting, a straight-line accumulation of capital gains on Discount bond in anticipation of receipt of par at maturity.

 Add on rate: A specific rate of interest to be paid. Stands in contrast to the rate on a Discount security, such as a Treasury bill, that pays no interest. Repo rate is an add-on rate.

 All equity rate: The Discount rate that reflects only the business risks of a project and abstracts from the effects of financing.The Discount rate that reflects only the business risks of a project and abstracts from the effects of financing.

 All equity rate: The Discount rate that reflects only the business risks of a project and abstracts from the effects of financing.The Discount rate that reflects only the business risks of a project and abstracts from the effects of financing.

 
 Related Terms
 

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