Topic: discount

discount in banking and investment, fee for lending money, which the banker deducts from the loan when it is given. Thus, with a $1,000 loan at a 6% discount, the borrower receives $940 and repays $1,000. Unlike a discount, interest is paid periodically. Central banks, as in the U.S. Federal Reserve System , charge a discount when lending notes to member banks. Such a fee is often called a rediscount. When bills of exchange are cashed in advance, a percentage is discounted from the price they would bring at maturity. When securities are sold at less than par, they are said to be sold at... Read more