The Excel YIELDDISC Function

Related Functions:
YIELD
YIELDMAT

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)
maturity - The maturity date of the security (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 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 settlement and maturity date arguments should be supplied to the function as either:

or

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:


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
#VALUE! - Occurs if either:
- any of the supplied arguments are non-numeric
or
- the supplied settlement or maturity dates are not valid Excel dates
#NUM! - 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)
#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 Yielddisc function.

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