Glossary Word Definition: Discount Notes

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Discount Notes

Obligations issued on a discount basis to mature in one year or less are designated consolidated discount notes. They were first issued in mid-1974 and have become an important financing tool to enhance the flexibility of cash management and to integrate asset and liability management. At the time of the sale the buyer may select maturities within the 30 to 360 day range, subject to the general limitations prescribed by the system. They are issued in book entry form only and are available in multiples of $5,000, with a minimum purchase of $100,000.