discount rate business definition
- The interest rate charged by the Federal Reserve on loans to its member banks. A change in this rate is viewed as a strong indicator of Fed policy with respect to future changes in the money supply and market interest rates. Generally, a rise in the discount rate signals increasing interest rates in the money and capital markets. Also called rediscount rate.
- The rate at which an investment's revenues and costs are discounted in order to calculate its present value.
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