1. The bank uses another formula called banker's discount rather than the true discount. So, in this case, Banker's discount = FV x r x t = 1050 x 0.05 x 1/2 = Rs. 26.25. Thus, this example clearly explains the difference between Banker's discount and the true discount.

2. It is the interest of face value for the remaining period before which the person withdraws money from the bank. Bankers discount (B.D) = (F * R * T)/100. True discount (T.D) – Interest for the remaining time before the period at which the person wants to withdraw the money. True discount (T.D) = (P.W * R * T)/100.

3. B.D. = S.I. on bill for unexpired time.