DISCOUNT RATE Definition

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DISCOUNT RATE, generally, it is a rate of return (cost of capital) used to convert a monetary sum, payable or receivable in the future, into present value.  In finance, it is the interest rate that the Federal Reserve of the U.S. Government charges a U.S. bank to borrow funds when a bank is temporarily short of funds. Collateral is necessary to borrow, and such borrowing is quite limited because the Fed views it as a privilege to be used to meet short-term liquidity needs, and not a device to increase earnings.

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EXCESS EARNINGS is that amount of anticipated benefits that exceeds a fair rate of return on the value of a selected asset base (often net tangible assets) used to generate those anticipated benefits.

TARIFF, usually, a countrys tax on imports. May sometimes refer to the rate of tax; and, is used interchangeably with the term 'duty'.

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