New Click here to Enroll in NaBFID Analyst Intro Class on May 6

    Question

    In Finance, what is Discount Rate?

    A rate used to discount present cash flows to the future value Correct Answer Incorrect Answer
    B rate used to discount future cash flows to the present value Correct Answer Incorrect Answer
    C annualized effective compounded return rate Correct Answer Incorrect Answer
    D both b & c Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    A discount rate is a part of the calculation of present value when doing a discounted cash flow analysis, and second, the discount rate is the interest rate the Federal Reserve charges on loans given to banks through the Fed's discount window loan process.

    Practice Next