- In a general sense, an allowance or deduction made from a gross sum on any account whatever.In a more limited and technical sense, the taking of interest in advance. A deduction from an original price or debt, allowed for paying promptly or in cash. Method of selling securities (e.g., treasury bills) which are issued below face value and redeemed at face value.Difference between a bond's current market price and its face value.Reduction in normal selling price of goods.The low initial interest rate lenders offer on adjustable-rate mortgages. It usually applies for one or two years. After the discount period ends, the rate usually increases, depending on the index used to determine the interest rate.To purchase an instrument or other right to the payment of money, usually for an amount less than the face amount or value of the right. A discount by a bank means a drawback or deduction made upon its advances or loans of money, upon negotiable paper or other evidences of debt payable at a future day, which are transferred to the bank.Although the discounting of notes or bills, in its most comprehensive sense, may mean lending money and taking notes in payment, yet, in its more ordinary sense, the discounting of such means advancing a consideration for a bill or note, deducting or discounting the interest which will accrue for the time the note has to run. Discounting by a bank means lending money upon a note, and deducting the interest or premium in advance. That step in lending transaction where interest on loan is taken in advance by deducting amount therefor for term of loan, giving borrower face value of obligation less interest. Russell v. Lumbermen's Mortg. Co., Com.Pl., 27 Ohio Misc. 171, 273 N.E.2d 803, 804.See also rebate@ quantity discountAllowed manufacturers or wholesalers for purchases in large amounts. Robinson Patman Act requires that such be justified by savings of seller.@- trade discount@ discount brokerA bill broker; one who discounts bills of exchange and promissory notes, and advances money on securities. A securities broker that executes buy and sell orders at rates lower than full service brokers@ discount loanA loan in which the bank deducts the interest in advance at the time the loan is made@ discount marketSegment of the money market in which banks and other financial institutions trade commercial paper@ discount ratePercentage of the face amount of commercial paper which a holder pays when he transfers such paper to a financial institution for cash or credit. Rate charged for discounting loan.See discountThe rate of interest used in the process of finding present values (discounting). The discount rate is the rate charged Federal Reserve System member banks for borrowing from the country's district Federal Reserve banks. The rate, which is set by the Federal Reserve Board, controls the supply of money available to banks for lending and provides a floor for interest rates@ discount sharesShares of stock issued as fully paid /and nonassessable for less than the full lawful consideration. Par value shares issued for cash less than par value.Discount shares are considered a species of watered shares and may impose a liability on the recipient equal to the difference between the par value and the cash for which such shares were issued@ discount stockSee discount shares@ discount yieldYield on a security sold at a discount@
Black's law dictionary. HENRY CAMPBELL BLACK, M. A.. 1990.