Discount basis - Revision history

imported>Doug Williamson: Add link.

2022-07-07T00:02:55Z

Add link.

2019-09-04T14:57:55Z

Reorder links.

2016-01-15T20:40:00Z

Improve calculations.

← Older revision		Revision as of 20:40, 15 January 2016
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	The relationship between the periodic discount rate (d) and the periodic yield (r) is:		The relationship between the periodic discount rate (d) and the periodic yield (r) is:

	r = d / ( 1 - d )		r = d / (1 - d)

	So in this case:		So in this case:

	r = 0.10 / ( 1 - 0.10 = 0.90 )		r = 0.10 / (1 - 0.10)

			r = 0.10 / 0.90

	= 11.11%		= 11.11%

2015-12-02T12:40:34Z

Standardise headings with examples

← Older revision		Revision as of 12:40, 2 December 2015
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	'''Example'''		<span style="color:#4B0082">'''Example: Discount basis calculation'''</span>

	An instrument is quoted - on a <u>discount basis</u>, one period before its maturity - at a discount of 10% per period.		An instrument is quoted - on a <u>discount basis</u>, one period before its maturity - at a discount of 10% per period.

2015-10-27T09:19:18Z

Link with Periodic discount rate page.

2015-10-27T09:18:36Z

Link with related pages.

2015-03-15T13:11:31Z

Standardise appearance of page.

← Older revision		Revision as of 13:11, 15 March 2015
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	'''~~For example:~~'''		'''Example'''

	~~when an~~ instrument is quoted - on a <u>discount basis</u>, one period before its maturity - at a discount of 10% per period,		An instrument is quoted - on a <u>discount basis</u>, one period before its maturity - at a discount of 10% per period.

	~~this~~ means that it is currently trading at a price of 100% LESS 10% = 90% of its terminal value.		This means that it is currently trading at a price of 100% LESS 10% = 90% of its terminal value.

	(The periodic ''yield'' on this instrument is 10% / 90% = 11.11%. So if the same instrument had been quoted on a <u>yield basis</u>, then the quoted yield per period = 11.11%.)		(The periodic ''yield'' on this instrument is 10% / 90% = 11.11%. So if the same instrument had been quoted on a <u>yield basis</u>, then the quoted yield per period = 11.11%.)

2015-03-14T15:37:25Z

Align presentation of formula with qualification material

← Older revision		Revision as of 15:37, 14 March 2015
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	This term can refer either to the cash flows of an instrument (Discount instruments) or to its basis of market quotation (Discount rate).		This term can refer either to the cash flows of an instrument (Discount instruments) or to its basis of market quotation (Discount rate).

	For example when an instrument is quoted - on a <u>discount basis</u>, one period before its maturity - at a discount of 10% per period, this means that it is currently trading at a price of 100% LESS 10% = 90% of its terminal value.

	(The periodic ''yield'' on this instrument is 10%/90% = 11.11%. So if the same instrument had been quoted on a <u>yield basis</u>, then the quoted yield per period = 11.11%.)		'''For example:'''

			when an instrument is quoted - on a <u>discount basis</u>, one period before its maturity - at a discount of 10% per period,

			this means that it is currently trading at a price of 100% LESS 10% = 90% of its terminal value.

			(The periodic ''yield'' on this instrument is 10% / 90% = 11.11%. So if the same instrument had been quoted on a <u>yield basis</u>, then the quoted yield per period = 11.11%.)


	The relationship between the periodic discount rate (d) and the periodic yield (r) is:		The relationship between the periodic discount rate (d) and the periodic yield (r) is:

	r = d/[1-d]		r = d / ( 1 - d )

	So in this case:		So in this case:

	r = 0.10/[1 - 0.10 = 0.90]		r = 0.10 / ( 1 - 0.10 = 0.90 )

	= 11.11%		= 11.11%

2014-11-19T15:46:00Z

Updated entry. Source ACT Glossary of terms

← Older revision		Revision as of 15:46, 19 November 2014
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	The relationship between the periodic discount rate (d) and the periodic yield (r) is:		The relationship between the periodic discount rate (d) and the periodic yield (r) is:

	r = d/[1-d]		r = d/[1-d]

	So in this case:		So in this case:
	r = 0.10/[1 - 0.10 = 0.90] = 11.11%
			r = 0.10/[1 - 0.10 = 0.90]

			= 11.11%


	== See also ==		== See also ==

2013-05-28T14:02:55Z