Selling something on a discounted basis is to sell below maturity value, so that
the difference makes up all or part of the interest.
Discounted cash flow (DCF)
Future cash flows multiplied by discount factors to obtain present values.
Discounted dividend model (DDM)
A formula to estimate the intrinsic value of a firm by figuring the present value of
all expected future dividends.
Discounted in/by market
Used in the context of general equities. In/by the market. Unannounced
information that is widely accepted/anticipated, and hence is already taken into
account in the pricing of the security/ market (i.e., Poor earnings).
Discounted payback period rule
An investment decision rule in which the cash flows are discounted at an interest
rate and the payback rule is applied on these discounted cash flows.
Discount factor
Present value of $1 received at a stated future date.
Discounting
Calculating the present value of a future amount. The process is opposite to
compounding.
Discount period
The period during which a customer can deduct the discount from the net amount
of the bill when making payment.
Discount rate
The interest rate that the Federal Reserve charges a bank to borrow funds when
a bank is temporarily short of funds. Collateral is necessary to borrow, and such
borrowing is quite limited because the Fed views it as a privilege to be used to
meet short-term liquidity needs, and not a device to increase earnings.
