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Average discount rate |
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Average discount ratePurchasers tender their competitive bids on a discount rate basis. The weighted, or adjusted, mean of all bids accepted in Treasury bill auctions.Average discount rate Similar MatchesDividend discount modelDividend discount modelA way of valuing a share based on the net present value of the dividends that you expect to receive in the future.The simplest version of the model assumes that the company's dividend rate remains constant. The 'fair' price of the share is the dividend (in pennies per share) divided by the required rate of return. So if you want 10% a year from your shares, the value of a company paying a 7p dividend is 70p. If you think a return of 8% is satisfactory, the value of the same share is 87.5p.A more complex model assumes that the dividends of the company grow at a consistent rate. The fair price to pay is the next dividend divided by the required rate of return minus the rate at which dividends are expected to grow. So if the 7p dividend is expected to grow at 5% per year, an investor requiring an 12% return would value the shares at (7p x 1.05) divided by (0.12 - 0.05)= (7.35p) divided by (0.07)= 105p Discounted paybackDiscounted paybackThe length of time needed to recoup the present value of an investment. DiscountDiscountThe difference between the net asset value (NAV) per share of an investment trust and the share price, expressed as a percentage of the net asset value per share.e.g. if the NAV is £3.00, and the share price of the trust is £2.70, the trust is trading at a 10% discount to its NAV.When the share price is above the net asset value, it is said to be trading at a premium. Risk adjusted discount rateRisk adjusted discount rateThe rate established by adding a expected risk premium to the risk-free rate in order to determine the present value of a risky investment. Dividend Discount Model (DDM)Dividend Discount Model (DDM)A method to value the common stock of a company that is based on the present value of the expected future dividends. Further SuggestionsBank discount basisRediscount Accrued market discount Forward discount Pure discount bond Discount window bond discount discount rate Discounted in or by market Accretion (of a discount) Discount period Discount Discount Points discount yield Discount factor Dividend Discount Return Discount rate Discounting Original issue discount debt (OID debt) Discount Interest Deep discount bond Unamortized bond discount Discount yield Accrued discount Stepped discount mortgage |
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