The Excel DISC Function

Related Functions:
PRICE Function
YIELD Function

Basic Description

The Excel DISC function calculates the Discount Rate for a bond.

The format of the function is:

DISC( settlement, maturity, pr, redemption, [basis] )

Where the arguments are as follows :


settlement - The security's settlement date (ie. the date that the coupon is purchased)
maturity - The security's maturity date (ie. the date that the coupon expires)
pr - The security's price per $100 face value.
redemption - The security's redemption value per $100 face value
[basis] - An optional argument which defines the day count basis to be used in the calculation.
Possible values of Basis and their meanings are :

Basis Day Count Basis
0 (or omitted) US (NASD) 30/360
1 actual/actual
2 actual/360
3 actual/365
4 European 30/360
The financial day count basis rules are explained further on the Wikipedia Day Count Convention page


Note that the settlement and maturity dates should be input as either:

or

- If you attempt to input these date arguments as text, Excel may misinterpret them, due to different date systems, or date interpretation settings.

Warning: Although you can input the date arguments as date serial numbers, this is not recommended as date serial numbering does vary across different computer systems.


Disc Function Example

In the following example, the Excel Disc function is used to calculate the discount rate of a coupon purchased on 01-Apr-2010, with Maturity date 31-Mar-2015. The price per $100 face value is $95, the Redemption value is $100, and the US (NASD) 30/360 day count basis is used :

  A B
1 Settlement Date: 01-Apr-2010
2 Maturity Date: 31-Mar-2015
3 =DISC( B1, B2, 95, 100 )

The functions calculates the Discounted Rate to be 1.0%

Note that, as the default US (NASD) 30/360 day method is used in the above example, the basis argument can be omitted.


Further examples of the Excel Disc function can be found on the Microsoft Office website.


Disc Function Common Errors

If your Disc function gives you an error message, use the table below to look up the likely cause:

Common Errors
#VALUE! - Occurs if the supplied settlement or maturity arguments are not valid dates
#NUM! - Occurs if either:
- Invalid numbers are input for the pr, redemption or basis arguments

(i.e. Occurs if either: pr ≤ 0; redemption ≤ 0; or basis is supplied and is not equal to 1, 2, 3 or 4)

or
- The supplied maturity date is ≤ the supplied settlement date
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