What Is a Discount Bond? A discount bond is a bond that is issued for less than its par—or face—value. Discount bonds may also be a bond currently trading for less than its face value in the secondary market. A bond is considered a deep-discount bond if it is sold at a significantly lower price
What Is a Discount Broker? A discount broker is a stockbroker who carries out buy and sell orders at reduced commission rates compared to a full-service broker. However, a discount broker does not provide investment advice or perform analysis on a client’s behalf, unlike a full-service broker. Before the emergence of better communications technology, only individuals with a
What Is Discounted After-Tax Cash Flow? The discounted after-tax cash flow method is an approach to valuing an investment by assessing the amount of money generated and taking into account the cost of capital along with the applicable marginal tax rate. Discounted after-tax cash flow is similar to simple discounted cash flow (DCF), but here
What Is Discounted Future Earnings? Discounted future earnings is a valuation method used to estimate a firm’s worth based on earnings forecasts. The discounted future earnings method uses these forecasts for the earnings of a firm and the firm’s estimated terminal value at a future date, and discounts these back to the present using an appropriate
What Is the Discounted Payback Period? The discounted payback period is a capital budgeting procedure used to determine the profitability of a project. A discounted payback period gives the number of years it takes to break even from undertaking the initial expenditure, by discounting future cash flows and recognizing the time value of money. The
What Is a Discounted Payoff (DPO)? A discounted payoff (DPO) is the repayment of an obligation for less than the principal balance. Discounted payoffs often occur in distressed loan scenarios, but they can also be anticipated through contract clauses in other types of business dealings. Key Takeaways A discounted payoff is the repayment of an
What Is a Discount Margin—DM? A discount margin (DM) is the average expected return of a floating-rate security (typically a bond) that’s earned in addition to the index underlying, or reference rate of, the security. The size of the discount margin depends on the price of the floating- or variable-rate security. The return of floating-rate
What Is Dilution? Dilution occurs when a company issues new shares that result in a decrease in existing stockholders’ ownership percentage of that company. Stock dilution can also occur when holders of stock options, such as company employees, or holders of other optionable securities exercise their options. When the number of shares outstanding increases, each
What Is a Dilutive Acquisition? A dilutive acquisition is a takeover transaction that decreases the acquirer’s earnings per share (EPS) through lower (or negative) earnings contribution or if additional shares are needed to be issued by the acquiring company to pay for the acquisition. Key Takeaways A dilutive acquisition is a takeover transaction that decreases
What Is a Dim Sum Bond? “Dim sum bond’ is a slang term for bonds denominated in Chinese renminbi and issued in Hong Kong. Dim sum bonds are attractive to foreign investors who desire exposure to renminbi-denominated assets, but are restricted by China’s capital controls from investing in domestic Chinese debt. The term is derived
