DISCOUNT

1) Quality differences between those standards set for some futures contracts and the quality of the delivered goods. If inferior goods are tendered for delivery, they are graded below the standard, and a lesser amount is paid for them. They are sold at a discount; 2) Price differences between futures of different delivery months; 3) For short-term financial instruments, "discount" may be used to describe the way interest is paid. Short-term instruments are purchased at a price below the face value (discount). At maturity, the full face value is paid to the purchaser. The interest is imputed, rather than being paid as coupon interest during the term of the instrument; for example, if a T-Bill is purchased for $974,150, the price is quoted at 89.66, or a discount of 10.34% (100.00 - 89.66 = 10.34). At maturity, the holder receives $1,000,000.