What is the PRICE Excel Function Used for?

 

 

Now we are going to learn all about formulas and functions. This is the best way to learn them:

 

PRICE

Returns the price per $100 face value of a security that pays periodic interest.

 

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

 

The PRICE function syntax has the following arguments:

  • Settlement Required. The security’s settlement date. The security settlement date is the date after the issue date when the security is traded to the buyer.
  • Maturity Required. The security’s maturity date. The maturity date is the date when the security expires.
  • Rate Required. The security’s annual coupon rate.
  • Yld Required. The security’s annual yield.
  • Redemption Required. The security’s redemption value per $100 face value.
  • Frequency Required. The number of coupon payments per year. For annual payments; frequency = 1; for semiannual; frequency = 2; for quarterly; frequency = 4.
  • Basis Optional. The type of day count basis to use.
    BASIS DAY COUNT BASIS
    0 or omitted US (NASD) 30/360
    1 Actual/actual
    2 Actual/360
    3 Actual/365
    4 European 30/360

 

Remarks

 

  • Microsoft Excel stores dates as sequential serial numbers so they can be used in calculations. By default; January 1; 1900 is serial number 1; and January 1; 2008 is serial number 39448 because it is 39;448 days after January 1; 1900.
  • The settlement date is the date a buyer purchases a coupon; such as a bond. The maturity date is the date when a coupon expires. For example; suppose a 30-year bond is issued on January 1; 2008; and is purchased by a buyer six months later. The issue date would be January 1; 2008; the settlement date would be July 1; 2008; and the maturity date would be January 1; 2038; which is 30 years after the January 1; 2008; issue date.
  • Settlement; maturity; frequency; and basis are truncated to integers.
  • If settlement or maturity is not a valid date; PRICE returns the #VALUE! error value.
  • If yld < 0 or if rate < 0; PRICE returns the #NUM! error value.
  • If redemption <= 0; PRICE returns the #NUM! error value.
  • If frequency is any number other than 1; 2; or 4; PRICE returns the #NUM! error value.
  • If basis < 0 or if basis > 4; PRICE returns the #NUM! error value.
  • If settlement => maturity; PRICE returns the #NUM! error value.
  • PRICE is calculated as follows:where:
    • DSC = number of days from settlement to next coupon date.
    • E = number of days in coupon period in which the settlement date falls.
    • N = number of coupons payable between settlement date and redemption date.
    • A = number of days from beginning of coupon period to settlement date.

 

Interactive Example

Change the white cells data and see the result in the yellow cell.

 

 

 

Do you want to said something? Leave a Reply