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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.

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