What does discounting mean?
Definitions for discounting
dis·count·ing
This dictionary definitions page includes all the possible meanings, example usage and translations of the word discounting.
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Wikipedia
Discounting
Discounting is a financial mechanism in which a debtor obtains the right to delay payments to a creditor, for a defined period of time, in exchange for a charge or fee. Essentially, the party that owes money in the present purchases the right to delay the payment until some future date. This transaction is based on the fact that most people prefer current interest to delayed interest because of mortality effects, impatience effects, and salience effects. The discount, or charge, is the difference between the original amount owed in the present and the amount that has to be paid in the future to settle the debt.The discount is usually associated with a discount rate, which is also called the discount yield. The discount yield is the proportional share of the initial amount owed (initial liability) that must be paid to delay payment for 1 year. Discount yield = Charge to delay payment for 1 year debt liability {\displaystyle {\text{Discount yield}}={\frac {\text{Charge to delay payment for 1 year}}{\text{debt liability}}}} Since a person can earn a return on money invested over some period of time, most economic and financial models assume the discount yield is the same as the rate of return the person could receive by investing this money elsewhere (in assets of similar risk) over the given period of time covered by the delay in payment. The concept is associated with the opportunity cost of not having use of the money for the period of time covered by the delay in payment. The relationship between the discount yield and the rate of return on other financial assets is usually discussed in economic and financial theories involving the inter-relation between various market prices, and the achievement of Pareto optimality through the operations in the capitalistic price mechanism, as well as in the discussion of the efficient (financial) market hypothesis. The person delaying the payment of the current liability is essentially compensating the person to whom he/she owes money for the lost revenue that could be earned from an investment during the time period covered by the delay in payment. Accordingly, it is the relevant "discount yield" that determines the "discount", and not the other way around. As indicated, the rate of return is usually calculated in accordance to an annual return on investment. Since an investor earns a return on the original principal amount of the investment as well as on any prior period investment income, investment earnings are "compounded" as time advances. Therefore, considering the fact that the "discount" must match the benefits obtained from a similar investment asset, the "discount yield" must be used within the same compounding mechanism to negotiate an increase in the size of the "discount" whenever the time period of the payment is delayed or extended. The "discount rate" is the rate at which the "discount" must grow as the delay in payment is extended. This fact is directly tied into the time value of money and its calculations. The "time value of money" indicates there is a difference between the "future value" of a payment and the "present value" of the same payment. The rate of return on investment should be the dominant factor in evaluating the market's assessment of the difference between the future value and the present value of a payment; and it is the market's assessment that counts the most. Therefore, the "discount yield", which is predetermined by a related return on investment that is found in the financial markets, is what is used within the time-value-of-money calculations to determine the "discount" required to delay payment of a financial liability for a given period of time.
Webster Dictionary
Discounting
of Discount
Wikidata
Discounting
Discounting is a financial mechanism in which a debtor obtains the right to delay payments to a creditor, for a defined period of time, in exchange for a charge or fee. Essentially, the party that owes money in the present purchases the right to delay the payment until some future date. The discount, or charge, is simply the difference between the original amount owed in the present and the amount that has to be paid in the future to settle the debt. The discount is usually associated with a discount rate, which is also called the discount yield. The discount yield is simply the proportional share of the initial amount owed that must be paid to delay payment for 1 year. Discount Yield = "Charge" to Delay Payment for 1 year / Debt Liability It is also the rate at which the amount owed must rise to delay payment for 1 year. Since a person can earn a return on money invested over some period of time, most economic and financial models assume the "Discount Yield" is the same as the Rate of Return the person could receive by investing this money elsewhere over the given period of time covered by the delay in payment. The Concept is associated with the Opportunity Cost of not having use of the money for the period of time covered by the delay in payment. The relationship between the "Discount Yield" and the Rate of Return on other financial assets is usually discussed in such economic and financial theories involving the inter-relation between various Market Prices, and the achievement of Pareto Optimality through the operations in the Capitalistic Price Mechanism, as well as in the discussion of the "Efficient Market Hypothesis". The person delaying the payment of the current Liability is essentially compensating the person to whom he/she owes money for the lost revenue that could be earned from an investment during the time period covered by the delay in payment. Accordingly, it is the relevant "Discount Yield" that determines the "Discount", and not the other way around.ttt
Numerology
Chaldean Numerology
The numerical value of discounting in Chaldean Numerology is: 6
Pythagorean Numerology
The numerical value of discounting in Pythagorean Numerology is: 9
Examples of discounting in a Sentence
I'm not discounting the fact that there are significant technical hurdles and we need to satisfy all of those issues, i'm just saying that we have experience doing so.
You haven’t been to the border, and I haven’t been to Europe. And I don’t know, I don’t understand the point that you’re making. I’m not discounting the importance of the border.
What we're seeing is the market actively pricing in the December rate hike, jumping ahead of the hike, discounting it ahead of time.
You can imagine if they are buying it three times faster we are not discounting ... They are buying it at full price, a 20 percent improvement of full-price sales could add tens of millions to the bottom line.
They are never asked that question. Or at least, maybe I have missed it, but women I know feel that is a form of discounting, that they are less likely to win the nomination. That is what I am talking about, people can take it out of context.
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Translations for discounting
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"discounting." Definitions.net. STANDS4 LLC, 2024. Web. 24 Apr. 2024. <https://www.definitions.net/definition/discounting>.
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