Discount

By December 16, 2014 No Comments

The amount by which the sales price of a note (or financial instrument) is below or less than its face value. The purpose of a discount is to adjust the yield upward either in lieu of interest or in addition to interest. Discount points are payable to the lender by the borrower or seller to increase the lender’s effective yield. One point is equal to 1% of the loan.

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