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Dec 26 4:00 PM EST

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To: Sun Tzu who wrote (439)	2/19/1999 5:41:00 PM
From: Iceberg	Read Replies (1) of 10713

>I did not say "discount rate". The sentence is to be taken at its normal English meaning. Sun Tzu, Thank you for correcting me once again. You are right. You did not say "discount rate", but that was my interpretation of your use of the word "discount". In saying "discount rate", I meant the rate used to determine the PRESENT VALUE of future CASH FLOWS. That is one commonly used definition of a "discount rate", as is the one you mentioned about the banking system. My point was that the risk premiums you talked about, and discount rates - defined as the rates used to determine the present value of future cash flows - would be similar numbers, if not the same numbers, would they not? In other words, what's the difference between a risk premium of 25% and a discount rate of 25%? Ice

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