discount rate


Definition of discount rate

1 : the interest on an annual basis deducted in advance on a loan
2 : the charge levied by a central bank for advances and rediscounts

Examples of discount rate in a Sentence

Recent Examples on the Web Environmental economists have generally suggested a low discount rate for the social cost of carbon because many of its worst costs won’t be felt for decades. Abby Smith, Washington Examiner, "Biden orders 'social cost' overhaul in bid to reduce climate pollution," 22 Jan. 2021 And many economists favor drastically reducing the discount rate. Paul Voosen, Science | AAAS, "Trump downplayed the costs of carbon pollution. That’s about to change," 22 Jan. 2021 Revenue net of interest expense fell 20% from a year earlier, American Express said, attributing the drop to less card-member spending and a decline in the average discount rate. Allison Prang, WSJ, "American Express Sees Higher Consumer Retail Spending," 23 Oct. 2020 The audit notes that the costs for retiree health insurance could go up, depending on factors such as enrollment and the state’s discount rate. Benjamin Yount, Washington Examiner, "Wisconsin’s State Retiree Health Insurance costs jumped $142 million," 15 Oct. 2020 While a good sign for the economy, a sustained elevation of Treasury yields would likely slow the rally in stocks, which has been driven by growth stocks that benefit the most from a falling discount rate. Daniel Tenreiro, National Review, "The Capital Note: Yield Curve, Corporations & Climate," 8 Oct. 2020 As the capitalization/discount rate approaches zero, the present value approaches infinity. WSJ, "Stock Valuation Tool Loses Accuracy at Very Low Rates," 22 Sep. 2020 But if the discount rate put on future profits is declining, the present value of those future profits is necessarily higher, even if the profits themselves are not. David L. Bahnsen, National Review, "Explaining the Market Response to Today’s Economic Distress," 2 Sep. 2020 At Tuesday’s record close of 3526, the S&P 500 Index is trading at a discount rate of 3.68% on earnings projected at $130 a share. Ven Ram,, "Treasury Yields Will Become a Headache for Stocks Around 1%," 1 Sep. 2020

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'discount rate.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of discount rate

1827, in the meaning defined at sense 1

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Time Traveler for discount rate

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The first known use of discount rate was in 1827

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Statistics for discount rate

Last Updated

2 Feb 2021

Cite this Entry

“Discount rate.” Dictionary, Merriam-Webster, Accessed 25 Feb. 2021.

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More Definitions for discount rate

discount rate


Legal Definition of discount rate

1 : the interest on an annual basis deducted in advance on a loan
2 : the interest levied by the Federal Reserve for advances and rediscounts

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