Discount Rate: Everything Must Go!

If we were to discount an investment, much like a US Treasury is sold at a discount to its face value, we would be accommodating the cost of our risks rather than discounting a good to meet our relative satisfaction. If we think about equilibrium and replace the idea of relative satisfaction with the value of risk, we can suppose that someone is willing to pay more for an investment with decreased risk, and less for an investment with increased risk.