The Excel PRICE Function

Related Functions:
RATE function
YIELD function

Basic Description

The Excel Price function calculates the price, per $100 face value of a security that pays periodic interest.

The syntax of the function is :

PRICE( settlement, maturity, rate, yld, redemption, frequency, [basis] )

Where the arguments are as follows:

settlement - The settlement date of the security (ie. the date that the coupon is purchased)
maturity - The maturity date of the security (ie. the date that the coupon expires)
rate - The security's annual coupon rate
yld - The annual yield of the security
redemption - The security's redemption value per $100 face value
frequency - The number of coupon payments per year. This must be one of the following:
1 - Annually
2 - Semi-Annually
4 - Quarterly
[basis] - An optional integer argument which specifies the financial day count basis that is used by the security. Possible values 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 in detail on the Wikipedia Day Count Convention page

Note that the date arguments should be entered into the function as either:

or

Warning:

- If you attempt to input the date arguments as text, there is a chance that these may be interpreted differently, due to the date system and date interpretation settings on your computer.
- Although you can enter dates as serial numbers, this is not recommended, as date serial numbering varies across different computer systems.


Excel Price Function Example

In the following example, the Excel Price function is used to calculate the price per $100 face value of a coupon purchased on 01-Apr-2012, with maturity date 31-Mar-2020 and a rate of 12%. The yield is 10% and the redemption value is $100. Payments are made semi-annually and the US (NASD) 30/360 day count basis is used:

  A B
1 Settlement Date: 01-Apr-2012
2 Maturity Date: 31-Mar-2020
3 =PRICE( B1, B2, 12%, 10%, 100, 2 )

The function calculates the Price per $100 face value to be $110.83.

- i.e. a bond with the above terms would be valued at $110.83

Note that, in the above example:


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


Price Function Errors

If you get an error from the Price function, this is likely to be one of the following:

Common Errors
#NUM! - Occurs if either:
- the settlement date is ≥ maturity date
or
- Invalid numbers are supplied for the rate, yld, redemption, frequency or basis arguments

(i.e. if either: rate < 0; yld < 0; redemption ≤ 0; frequency is any number other than 1, 2 or 4; or basis is any number other than 0, 1, 2, 3 or 4)

#VALUE! - Occurs if either:
- any of the supplied arguments are non-numeric
or
- the settlement or the maturity arguments are not a valid dates
#NAME? -

Occurs when Analysis ToolPak add-in is not enabled in your Excel.
You will need to enable the add-in if you want to use the Excel Price function.

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