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The Excel YIELD Function
Basic Description
The Excel YIELD function calculates the Yield
of a security that pays periodic interest
The syntax of the function is :
YIELD( settlement, maturity, rate, pr, redemption, frequency, [basis] )
Where the arguments are as follows:
| settlement |
- |
The settlement date of the security (ie. the date that the coupon is purchased)
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| maturity |
- |
The maturity date of the security (ie. the date that the coupon expires)
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| rate |
- |
The security's annual coupon rate
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| pr |
- |
The security's price per $100 face value
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| redemption |
- |
The security's redemption value per $100 face value
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| frequency |
- |
The number of coupon payments per year. This must be one of the following:
| 1 | - | Annually |
| 2 | - | Semi-Annually |
| 4 | - | Quarterly |
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| [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
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Note that the settlement and maturity arguments should be supplied to the function as either:
- References to cells containing dates
or
- Dates returned from formulas
Warning:
| - |
If you attempt to input the settlement and maturity dates as text, these can be
interpreted differently, depending on the date system and date interpretation settings on your computer. |
| - |
Although you can input the dates as serial numbers, this is not recommended, as date serial
numbering varies across different computer systems. |
Excel Yield Function Example
The following example shows the Excel Yield function used to calculate the yield on a coupon purchased
on 01-Jan-2010, with Maturity date 30-Jun-2015 and a rate of 10%. The price per $100 face value is $101 and
the redemption value is $100. Payments are made quarterly and the US (NASD) 30/360 day count basis is used:
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A |
B |
| 1 |
Settlement Date: |
01-Jan-2010 |
| 2 |
Maturity Date: |
30-Jun-2015 |
| 3 |
=YIELD( B1, B2, 10%, 101, 100, 4 ) |
Calculates the yield to be 9.76%.
Note that, in the above example, the [basis] argument has been omitted, so the default US (NASD) 30/360
day method is used. Note also that, as recommended, the date arguments have been input as references to cells
containing dates.
Further examples of the Excel Yield function can be found on the
Microsoft Office website.
Yield Function Errors
If you get an error from the Yield function, this is likely to be one of the following:
Common Errors
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#VALUE!
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-
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Occurs if either:
| - | any of the supplied arguments are non-numeric |
| or | |
| - | the settlement or the maturity arguments are not a valid dates |
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#NUM!
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Occurs if either:
| - | the settlement date is ≥ maturity date |
| or | |
| - |
Invalid numbers are supplied for the rate, pr, redemption, frequency or [basis] arguments
(i.e. if either: rate < 0; pr ≤ 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)
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#NAME?
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-
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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 Yield function.
To do this in Excel 2003 :
- From the Tools drop-down menu, select the option Add-Ins ...
- An 'Add-Ins' window will pop up. From this, select the option Analysis ToolPak and click OK
To do this in Excel 2007 or Excel 2010 :
- Click the Microsoft button on the top left of your spreadsheet and select
the Excel Options button
- From the menu on the left hand side, select Add-Ins
- In the 'Manage:' box, select Excel Add-ins and click Go...
- An 'Add-Ins' window will pop up. From this, select the option Analysis ToolPak
and click OK
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