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Discount factor |
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Discount factorPresent value of $1 received at a stated future date.Discount factor Similar MatchesDeep discountDeep 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. Stepped discount mortgageStepped discount mortgageWhere the discount is, for example, fixed at one level for one year and then a slightly lesser level for two further years. Remember it is the percentage discount that is stepped and not the monetary amount, so your repayment can still vary. Bank discount basisBank discount basisA convention used for quoting bids and offers for Treasury bills in terms of annualized yield, based on a 360-day year. 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. Discounted rate mortgageDiscounted rate mortgageA mortgage which guarantees the interest rate charged will remain a set number of percentage points below the lender's standard variable rate. The rate changes as base rate moves up and down, but the relationship between base rate and the rate you pay remains constant. Further SuggestionsRediscountAccrued market discount Risk adjusted discount rate Discount securities Discount Points Discount Interest dividend discount model Underwriters discount Discounted basis Forward discount discount rate Discounting Straight Discount Discounted cash flow (DCF) Deep discount bond Original issue discount debt (OID debt) Discount payment discount Discount Discount rate Discounted dividend model (DDM) Documented discount notes Dividend Discount Return Average discount rate Discount Arbitrage |
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