In discounting an interest-bearing note, you are dealing with the time period associated with calculating the reduced value of the note before it reaches the maturity date. Here's the detailed explanation:
1. Understand the terms involved:
- Maturity Date: The date when the note is due to be paid.
- Date of original note: The date when the note was created.
- Date of discount: The date when the note is being discounted.
- Discount Period: The time period from when the note is discounted to the time it reaches maturity.
2. Context of Discounting:
- When you discount a note, you're essentially paying a lesser amount today than the total amount expected at maturity. This discounting includes calculating how much sooner the payment is being made compared to the maturity date.
3. Identifying the Discount Period:
- The discount period is specifically the time from the date the note is being discounted until its maturity date. This period directly influences the discounted value of the note.
Based on the understanding clarified, the discount period represents:
- Number of days from date of discount to date of maturity.
Hence, the correct choice is:
Number of days from date of discount to date of maturity.
