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Discount rate

The discount rate is the interest rate at which a central bank lends money to commercial banks. It is used as a tool to manage monetary policy by influencing the supply of money and credit in the economy. Commercial banks can borrow money from the central bank at the discount rate to meet their reserve requirements, or to lend to their customers. The discount rate can also refer to the rate at which a company discounts future cash flows to determine their present value, or the rate at which securities are sold below their face value.

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