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The Excel YIELDDISC Function
Basic Description
The Excel YIELDDISC function calculates the annual yield of a discounted security.
The syntax of the function is :
YIELDDISC( settlement, maturity, pr, redemption, [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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| 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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| [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 date arguments should be supplied to the function as either:
- References to cells containing dates
or
- Dates returned from formulas
Warning:
| - |
If you input the settlement and maturity dates as text, these may be misinterpreted,
due to the date system and date interpretation settings on your computer. |
| - |
It is not recommended that you input these dates as serial numbers, as the date serial
numbering used, varies across different computer systems. |
Excel Yielddisc Function Example
In the following spreadsheet, the Excel Yielddisc function is used to calculate the annual yield for a discounted
security that has the settlement date 01-Jan-2011 and the maturity date 30-Jun-2011. The price per $100 face value
is $97 and the redemption value is $100. The US (NASD) 30/360 day count basis is used:
| |
A |
B |
| 1 |
Settlement Date: |
01-Jan-2011 |
| 2 |
Maturity Date: |
30-Jun-2011 |
| 3 |
=YIELDDISC( B1, B2, 97, 100 ) |
This calculates the yield on the discounted security described above, to be 6.22%.
Note that, in the above example:
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The settlement and maturity arguments have been input as references to cells containing dates, as recommended above.
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As the [basis] argument has been omitted, the function uses the default value 0 (denoting the US (NADS)
30/360 day count basis).
Further examples of the Excel Yielddisc function can be found on the
Microsoft Office website.
Yielddisc Function Errors
If you get an error from the Yielddisc 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 supplied settlement or maturity dates are not valid Excel dates |
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#NUM!
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-
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Occurs if either:
| - | the settlement date is ≥ maturity date |
| or | |
| - |
Invalid numbers are supplied for the pr, redemption or basis arguments
(i.e. if either: pr ≤ 0; redemption ≤ 0; 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 Yielddisc 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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