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Discount

Truth:

The discount of a financial instrument is an amount less than the full value of that instrument at maturity.

Different financial instruments may be discounted by different percentages determined by a wide range of variables and circumstances.

Scam:

Fraudsters use the term discount is to persuade a potential investor that a financial instrument such as a LETTER OF CREDIT can be purchased from one bank, then taken to another bank where it will be 'discounted', i.e. held at the second bank while a portion of the value of the instrument is used for HIGH-YIELD INVESTMENT.   Scenarios may differ slightly, but this is the basic scheme.

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