Global Definitions Database

With reference to finance:  a yield rate used to convert future payments or receipts into present value; reflects both the safe rate earned from a completely riskless investment (which rate may reflect anticipated loss of purchasing power due to inflation) and compensation for risk, lack of liquidity, and investment management expenses; most often estimated by band-of-investment analysis or sales comparison analysis that estimates typical internal rates of return; With reference to monetary policy:  the rate that the Federal Reserve Bank charges member banks to borrow.