The rate of discount is:?

The Rate of Discount is:

a. the reduction in price you get for paying by cash rather credit card

b. the rate of interest you would earn in a bank

c. the rate at which the current value of a future sum of money declines over time

d. the movement over time of a specific price index

e. none of the above

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4 Responses to “The rate of discount is:?”

  1. Fjeoa says:

    e – when looked at by an economist (discount rate is the rate that the fed charges member banks)
    a – when looked at by a basic consumer

    the others dont make sense

  2. colberg100 says:

    There are several meanings of the term "The Rate of Discount."

  3. btwrestler07 says:

    I have heard of this as the discount rate in my finance class… im assuming they are the same thing. The discount rate is the rate needed to bring a future sum of money to its current dollar value. Answer C sounds close but it seems oddly worded so i would say E.

  4. Jonathan says:

    It’s c.

    If I expect to get £1000 in one year and the discount rate is 10% the current value of that £1000 is
    1000/1.1=£909.09. If the money was due in 2 years instead it would only be worth 1000/1.1^2=£826.45 now.

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