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hi tutor,
could you please explain to me, what happens when discount factor unwinds, how does it increase cash flows?
thank you
has this question on the unwinding of discount been answered? i would like to know what the rply was.
There is no such expression as ‘unwinding a discount factor’ !!!!
It is meaningless.
I think you are confusing it with ‘unwinding the discount’. What that refers to is that if you owe money payable in (say) 5 years time, then the present value will mean discounting it for 5 years.
However, in a years time, the present value will mean discounting it for only 4 year (which will obviously give a different present value).
We call this effect unwinding the discount (not unwinding the discount factor).There is no way that this would be referred to in Paper F9.
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