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Discount period |
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Definition of Discount periodDiscount periodThe period during which a customer can deduct the discount from the net amount of the bill
Related Terms:Discounted payback period ruleAn investment decision rule in which the cash flows are discounted at an Net periodThe period of time between the end of the discount period and the date payment is due. ADF (annuity discount factor)the present value of a finite stream of cash flows for every beginning $1 of cash flow. DLOC (discount for lack of control)an amount or percentage deducted from a pro rata share of the value of 100% of an equity interest in a business, to reflect the absence of some or all of the powers of control. DLOM (discount for lack of marketability)an amount or percentage deducted from an equity interest to reflect lack of marketability. discount ratethe rate of return on investment that would be required by a prudent investor to invest in an asset with a specific level risk. Also, a rate of return used to convert a monetary sum, payable or receivable in the future, into present value. fractional interest discountthe combined discounts for lack of control and marketability. g the constant growth rate in cash flows or net income used in the ADF, Gordon model, or present value factor. PPF (periodic perpetuity factor)a generalization formula invented by Abrams that is the present value of regular but noncontiguous cash flows that have constant growth to perpetuity. QMDM (quantitative marketability discount model)model for calculating DLOM for minority interests r the discount rate Accretion (of a discount)In portfolio accounting, a straight-line accumulation of capital gains on discount Annualized holding period returnThe annual rate of return that when compounded t times, would have Average collection period, or days' receivablesThe ratio of accounts receivables to sales, or the total Bank discount basisA convention used for quoting bids and offers for treasury bills in terms of annualized Cash discountAn incentive offered to purchasers of a firm's product for payment within a specified time Compounding periodThe length of the time period (for example, a quarter in the case of quarterly Credit periodThe length of time for which the customer is granted credit. Deep-discount bondA bond issued with a very low coupon or no coupon and selling at a price far below par DiscountReferring to the selling price of a bond, a price below its par value. Related: premium. Discount bondDebt sold for less than its principal value. If a discount bond pays no interest, it is called a Discount factorPresent value of $1 received at a stated future date. Discount rateThe interest rate that the Federal Reserve charges a bank to borrow funds when a bank is Discount securitiesNon-interest-bearing money market instruments that are issued at a discount and Discount windowFacility provided by the Fed enabling member banks to borrow reserves against collateral Discounted basisSelling something on a discounted basis is selling below what its value will be at maturity, 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 DiscountingCalculating the present value of a future amount. The process is opposite to compounding. Dividend discount model (DDM)A model for valuing the common stock of a company, based on the Documented discount notesCommercial paper backed by normal bank lines plus a letter of credit from a Evaluation periodThe time interval over which a money manager's performance is evaluated. Forward discountA currency trades at a forward discount when its forward price is lower than its spot price. Holding periodLength of time that an individual holds a security. Holding period returnThe rate of return over a given period. Multiperiod immunizationA portfolio strategy in which a portfolio is created that will be capable of Neutral periodIn the Euromarket, a period over which Eurodollars are sold is said to be neutral if it does not Original issue discount debt (OID debt)Debt that is initially offered at a price below par. Pure-discount bondA bond that will make only one payment of principal and interest. Also called a zerocoupon Subperiod returnThe return of a portfolio over a shorter period of time than the evaluation period. T-period holding-period returnThe percentage return over the T-year period an investment lasts. Waiting periodTime during which the SEC studies a firm's registration statement. During this time the firm Workout periodRealignment period of a temporary misaligned yield relationship that sometimes occurs in Accounting periodThe period of time for which financial statements are produced – see also financial year. Discounted cash flow (DCF)A method of investment appraisal that discounts future cash flows to present value using a discount rate, which is the risk-adjusted cost of capital. Period costsThe costs that relate to a period of time. Periodic inventory systemAn inventory system in which the balance in the Inventory account is adjusted for the units sold only at the end of the period. Purchase discountsA contra account that reduces purchases by the amount of the discounts taken for early payment. Sales discountsA contra account that offsets revenue. It represents the amount of the discounts for early payment allowed on sales. discounted cash flow (DCF)Refers to a capital investment analysis technique Average Collection PeriodAverage number of days necessary to receive cash for the sale of Continuous DiscountingThe process of calculating the present value of a stream of future Discount RateThe rate of interest used to calculate the present value of a stream DiscountingThe process of calculating the present value of a stream of future Payback PeriodThe number of years necessary for the net cash flows of an ad hoc discounta price concession made under competitive pressure (real or imagined) that does not relate to quantity purchased compounding periodthe time between each interest computation discountingthe process of reducing future cash flows to present value amounts discount ratethe rate of return used to discount future cash payback periodthe time it takes an investor to recoup an period costcost other than one associated with making or acquiring inventory periodic compensationa pay plan based on the time spent on the task rather than the work accomplished risk-adjusted discount rate methoda formal method of adjusting for risk in which the decision maker increases the rate used for discounting the future cash flows to compensate for increased risk Discount curveThe curve of discount rates vs. maturity dates for bonds. Odd first or last periodFixed-income securities may be purchased on dates Discounted cash flowA technique that determines the present value of future cash Reporting periodThe time period for which transactions are compiled into a set of financial statements. Sales discountA reduction in the price of a product or service that is offered by the constant-growth dividend discount modelVersion of the dividend discount model in which dividends grow at a constant rate. discount factorPresent value of a $1 future payment. discount rateInterest rate used to compute present values of future cash flows. dividend discount modelComputation of today’s stock price which states that share value equals the present value of all expected future dividends. payback periodTime until cash flows recover the initial investment of the project. DiscountThe percentage amount at which bonds sell below their par value. Also the percentage amount at which a currency sells on the forward market below its current rate on the spot market. Discount BondA bond with no coupons, priced below its face value; the return on this bond comes from the difference between its face value and its current price. DiscountingCalculating the present value of a future payment. Discount RateThe interest rate at which the Fed is prepared to loan reserves to commercial banks. Discount WindowThe Federal Reserve facility at which reserves are loaned to banks at the discount rate. Average Amortization PeriodThe average useful life of a company's collective amortizable asset base. Extended Amortization PeriodAn amortization period that continues beyond a long-lived asset's economic useful life. Extended Amortization PeriodsAmortizing capitalized expenditures over estimated useful lives that are unduly optimistic. Periodic inventoryA physical inventory count taken on a repetitive basis. Grace PeriodA specific period of time after a premium payment is due during which the policy owner may make a payment, and during which, the protection of the policy continues. The grace period usually ends in 30 days. Non-Smoker DiscountIn October 1996 it was announced in the international news that scientists had finally located the link between cigarette smoking and lung cancer. In the early 1980's, some Canadian Life Insurance Companies had already started recognizing that non-smokers had a better life expectancy than smokers so commenced offering premium discounts for life insurance to new applicants who have been non-smokers for at least 12 months before applying for coverage. Today, most life insurance companies offer these discounts. Critical Growth PeriodsTimes in a company's history when growth is essential and without which survival of the business might be in jeopardy. Discount RateA rate of return used to convert a monetary sum, payable or receivable in the future, into present value. Discounted Cash FlowTechniques for establishing the relative worth of a future investment by discounting (at a required rate of return) the expected net cash flows from the project. DiscountingThe process of finding the present value of a series of future cash flows. discounting is the reverse of compounding. Discounting of Accounts ReceivableShort-term financing in which accounts receivable are used as collateral to secure a loan. The lender does not buy the accounts receivable but simply uses them as collateral for the loan. Also called pledging of accounts receivable. Full Credit PeriodThe period of trade credit given by a supplier to its customer. Grace PeriodLength of time during which repayments of loan principal are excused. Usually occurs at the start of the loan period. Supplier DiscountAn amount deducted from an invoice by a supplier in exchange for quick payment (a typical example might be a 2% discount if paid in 10 days or the full amount of the invoice in 30 days). Annuity PeriodThe time between each payment under an annuity. Waiting Period (Credit Insurance)A specific time that must pass following the onset of a covered disability before any benefits will be paid under a creditor disability policy. (Also known as an elimination period). PV (present value of cash flows)the value in today’s dollars of cash flows that occur in different time periods. Deferred futuresThe most distant months of a futures contract. A bond that sells at a discount and does not Internal rate of return a. The average annual yield earned by an investment during the period held. Modified durationThe Macaulay duration discounted by the per-period Present valueToday’s value of an investment that yields some future value Present ValueThe amount due on an obligation less any interest on that obligation that would Supplier Creditperiod of delay allowed by a firm's supplier to pay its invoices. Frequently, the terms are : 2% discount on invoice if paid in 10 days or net if paid in 30 days.
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