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Definition: Discount

It is the difference between the nominal amount of the liability and the actual amount paid.

It also means the amount by which a debenture/bond sells below its nominal value. It happens when the market interest rate is more than the interest rate offered by the bond. This weakens the financial condition of the bond and hence the market value decreases.

Discount is also offered by the creditors such that the debtor pays the amount before the due date. It is a concession given by the creditors.


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