DISC: Calculate the discount rate of a security

- [Instructor] Evaluating a bond is easy … when you know the discount rate … that is applied to your purchase, … in other words, how much of a discount you're getting … over the face value of the investment. … If you don't know an investment's discount rate … but you do know other facts about it, … you can use the DISC or discount function … to find its discount rate. … My sample file is DiscountRate_05_05, … and you can find it in the Chapter05 folder … of your Exercise Files collection. … In the context of a bond, … the discount rate is the discount you're getting … off of purchase, so it doesn't refer to the discount rate. … That is the assumed safe amount … that you can get in return on an investment. … So for example, the safe rate of investment might be 3% … because you assume the discount rate … for U.S. Treasury bonds is around three to 3.2%. … In this case, we're looking at the discount … off of the redemption value. … To find the discount rate, … you need to know a number of things. …