discount rate

Definitions (2)

1. The rate at which member banks may borrow short term funds directly from a Federal Reserve Bank. The discount rate is one of the two interest rates set by the Fed, the other being the Federal funds rate. The Fed actually controls this rate directly, but this fact does not really help in policy implementation, since banks can also find such funds elsewhere. also called Federal Reserve Discount Rate.
2. The interest rate used in discounting future cash flows; here also called capitalization rate.

Use discount rate in a sentence

You may want to offer a discount rate to certain customers if they have been buying from you for a long time.

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I got the item at a discount rate, which was great because I did not have a lot of money and it was nice to save some.

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The banker we use is an old friend of mine from childhood, so he was able to allow my company to borrow money from the bank at just above the discount rate at which it borrows money from the Federal Reserve.

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