Discount 1 Amount

Discount 1 Amount

Discount. (1)The amount deducted from the face value of a bill of exchange or other promissory note for cashing it in advance of the date when it matures. The importance of a bill of exchange is that it can be readily discounted and rediscounted, and is therefore readily negotiable. The rate of discount varies with the time to maturity, the credit standing of the parties, etc.

(2) The surplus of the face value of a security or nominal value of a currency or commodity over its market price.

A deduction made from an account or charge, frequently as an allowance for prompt payment, e.g. trade discount.

Discount House. A member of the London Discount Market. The twelve major houses (or bill brokers) form the London Discount Market Association. A discount house borrows money from banks and other institutions on short terms and uses it to buy and hold bills of exchange (mainly Treasury bills) and short-dated Government bonds. They live by borrowing money more cheaply than they lent it, and to a much smaller extent from jobbing profits and commissions.

They enjoy privileges at the Bank of England, including the righ of recourse to cash if in need.

(2) A commercial organization which sells goods, particularly con-sumer durables, at reduced prices (or discounts). The practice is more common in countries such as the U.S.A. where resale price maintenance practices are prevalent but not rigidly enforced.

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