Posted in Finance, Accounting and Economics Terms, Total Reads: 375
Definition: At A Discount
‘At A Discount’ is a term which is used in reference to the stock markets. It means that the present value of the stock or securities are being sold at a less value. It could also be construed as the sale of bond, stocks or securities below their nominal, par or present value, just as is the case with physical goods.
A stock is usually sold at its nominal or par value at the IPO. There are strict rules in several countries which forbid the sales of the stock below the nominal or par value. However, after the IPO the stock can be sold below the present market value by an owner of the stock.
For example, a stock being traded at Rs.100 at the present market value could be sold at Rs.95. This is the case with the stock markets. This is done to increase the sales of the stock or commodity in consideration. Usually if the demand for the product (in this case the stock, bonds or securities) is low companies resort to this method to induce quick sales.
In goods or retail market, it simply means the sales of a commodity is being carried out at a lower price than stated. A discount on a commodity or product is usually given when the company wants to increase sales or at an occasion when people are likely to buy certain products (For e.g. In Diwali gold sales increases). It can also be done because of the pressure from the markets i.e. if all players in the markets are giving discount the company in that particular segment is bound to give discounts.