Interest computed on the face value of a loan and deducted in advance from the loan by the lending bank.
- Since we computed the bank discount rate from the dollar discount and the investment, all we have to do is reverse the process.
- For example, the bank discount method is used for Treasury bills sold by the U.S. government and commercial paper issued by businesses.
- If a bank customer obtains such an insurance quote, the bank will provide bank discounts on bank service fees for bank products to such customer.
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