# Discounting factor depends on [closed]

Does discounting factor only depends on issuer, or it also depends on structure of payments ( i.e. fixed or float)? Thank you in advance.

The central theme of Asset Pricing is in detecting what drives the evolution of the (stochastic) discount factor. Academic finance assume as a methodological starting point that expectations are rational, i.e. unbiased, hence when prices ( $p_t$ ) are determined as the expected value of the discounted (by the discount factor $M_{t+1}$) payoff of the security ( $X_{t+1}$ ), i.e. $p_t = E_t [M_{t+1}X_{t+1}]$, then what really drives prices is the functional form of the (stochastic) discount factor, i.e. $M_{t+1}= f(t, Z)$ .
You are asking what $Z$ is, but if I knew it exactly I could write a paper and win the Nobel Prize!