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Finance & Banking vocabulary · Interest & Exchange Rates

Discount factor

Meaning in finance & banking, with examples

nounAdvanced term

In finance & banking, discount factor means: A multiplier used to convert a future cash amount into its value at an earlier date.

In Turkish: iskonto faktörü

How it is used

Specify the valuation date, payment date and rate assumptions behind the factor.

Example sentences

  1. The analyst multiplied the future payment by a discount factor of 0.95.

    The multiplier translates future cash into a present valuation.

  2. Each bond payment used a discount factor for its own maturity.

    Different payment dates can require different factors.

Common collocations

  • calculate a discount factor
  • discount factor curve
  • valuationAn estimate of what a company, asset or property is worth, or the process of calculating it.
  • maturityThe date when a loan, deposit or bond ends and the principal must be repaid, or the length of time until that date.

More terms: Interest & Exchange Rates

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This page explains English vocabulary for learners. It is not financial advice.