Discounting
Summary of Discounting
The process of selling or transferring a bill or note at an amount less than the face value. A bill that matures at a future date is normally discounted by multiplying the number of days to maturity by the interest rate in effect at the time the face amount of the instrument was obtained, and deducting this sum from the face value. As a practical matter, the interest rate will correspond to the quality of the drawee and/or endorsers of the bill. In some cases it may be possible to sell the instrument without recourse; under this arrangement the buyer of the bill relieves the discounting party of any responsibility for future payment of the face amount of the instrument at maturity. In many cases, however, the person requesting the discount must endorse the bill, thereby making himself secondarily liable for the payment should the drawee or prior endorsers default.
(Main Author: William J. Miller)
Hierarchical Display of Discounting
Finance > Financial institutions and credit > Credit policy
Discounting
Concept of Discounting
See the dictionary definition of Discounting.
Characteristics of Discounting
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Resources
Translation of Discounting
- Spanish: Descuento
- French: Escompte
- German: Diskont
- Italian: Sconto
- Portuguese: Desconto bancário
- Polish: Dyskonto
Thesaurus of Discounting
Finance > Financial institutions and credit > Credit policy > Discounting
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