Definition:Discount rate; also called thehurdle rate, cost of capital, or required rate of return; is the expected rate of return for an investment. In other words, this is the interest percentage that a company or investor anticipates receiving over the life of an investment. ...
Interest is essentially a charge to the borrower for the use of an asset. Assets borrowed can include cash, consumer goods, vehicles, and property. Because of this, an interest rate can be thought of as the "cost of money"—higher interest rates make borrowing the same amount of money mor...
The basic formula for determining this discount factor would then be D=1/(1+P)^N, which would read that the discount factor is equal to one divided by the value of one plus the periodic interest rate to the power of the number of payments. For instance, if a company had a six perce...
The forward spread is the forward rate less the spot rate, or in the event of a discount rate, the spot rate minus the forward rate. Discount spreads can occur when there is a short-term demand or supply squeeze, or when there are interest rate differences on forex trades that result in...
Author: Harold Averkamp, CPA, MBA Definition of Effective Interest Rate The effective interest rate is the true rate of interest earned. It can also mean the market interest rate, the yield to maturity, the discount rate, the internal rate of return, the annual percentage rate (APR), and ...
A discount loan is a loan arrangement where the interest and charges are calculated when the loan is granted, and then subtracted...
Like an interest rate, the APR is expressed as a percentage. Unlike an interest rate, however, it includes other charges or fees such as mortgage insurance, most closing costs, discount points and loan origination fees. Why the difference? The APR is intended to give you more information ...
Like an interest rate, the APR is expressed as a percentage. Unlike an interest rate, however, it includes other charges or fees such as mortgage insurance, most closing costs, discount points and loan origination fees. Why the difference? The APR is intended to give you more information ...
What Are the Different Types of Interest-Bearing Accounts? What Is a Bond Year? What is Bond Premium Amortization? Discussion Comments Byanon328655— On Apr 04, 2013 What I would like to know is why do you subtract the discount from the interest expense. How does the discount correlate with...
If the rate ishigherthan the current interest rate, bonds will trade at a premium. If the rate islowerthan the current interest rate, bonds will trade at a discount. Investor demand for bonds is higher when the guaranteed interest payment on a bond is higher than the payout on newly issue...