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Deep discount |
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Deep discountIn the context of a rights issue, the issue of shares at a price much lower than the current trading price.In most rights issues, the new shares are priced at 10-15 per cent below the current price which is thought to be enough to ensure that existing shareholders take up the rights and buy the new shares.With a deep discount rights issue, the discount can be anything up to 50%. In August 2000 the media company Pearson announced a £1.7bn rights issue to pay for a US acquisition and priced it at a substantial discount. The reasoning was that for a rights issue of this size, and in volatile markets, the discount was necessary to ensure its success. Also, the company is estimated to have saved about £27m in underwriting fees.Similar MatchesAccrued discountAccrued discountInterest that accumulates on savings bonds from the date of purchase until the date of redemption or final maturity, whichever comes first. Series A, B, C, D, E, EE, F, I, and J are discount or accrual bonds, meaning principal and interest are paid when the bonds are redeemed. Series G, H, HH, and K are current-income bonds, and the semiannual interest paid to their holders is not included in accrued discount. DiscountDiscount1. Any reduction in price or value, especially when below a stated or normal price. 2. To buy or sell commercial paper at a price below face value to account for interest to accrue before maturity. 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. Discount yieldDiscount yieldThe yield or annual interest rate on a security sold to an investor at a discount. A bond that is sold at $4875 that matures to $5000 has a discount of $125. To calculate the discount yield: (discount divided by the face value of the security) multiplied by the (number of days in the year divided by the number of days to maturity). Dividend Discount ReturnDividend Discount ReturnThe rate of return which equates the present value of future expected dividends with the current market price of a security. Further SuggestionsDiscount paymentForward discount Deep discount bond Discount broker Bank discount basis discounted rate mortgage Discount rate Accretion (of a discount) discount rate Discount window Discounted cash flow (DCF) Discounted in or by market Original issue discount debt (OID debt) Risk adjusted discount rate discounted cashflow Original Issue Discount securities (OIDS) Documented discount notes Discounted basis Average discount rate Stepped discount mortgage Discounted payback period rule Discounted payback Discounting Discount securities Discount factor |
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