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Advanced Excel Financial - PRICE Function
Description
The PRICE function returns the price per $100 face value of a security that pays periodic interest.
Syntax
PRICE (settlement, maturity, rate, yld, redemption, frequency, [basis])
Arguments
Argument | Description | Required/ Optional |
---|---|---|
Settlement | The security's settlement date. The security settlement date is the date after the issue date when the security is traded to the buyer. |
Required |
Maturity | The security's maturity date. The maturity date is the date when the security expires. | Required |
Rate | The security's annual coupon rate. | Required |
Yld | The security's annual yield. | Required |
Redemption | The security's redemption value per $100 face value. | Required |
Frequency | The number of coupon payments per year.
|
Required |
Basis | The type of day count basis to use. Look at the Day Count Basis Table given below. |
Optional |
Day Count Basis Table
Basis | Day Count Basis |
---|---|
0 or omitted | US (NASD) 30/360 |
1 | Actual/actual |
2 | Actual/360 |
3 | Actual/365 |
4 | European 30/360 |
Notes
When N > 1 (N is the number of coupons payable between the settlement date and redemption date), PRICE is calculated as follows −
$$PRICE = \left [ \frac{redemption}{\left ( 1+\frac{yld}{frequency} \right )^{\left ( N-1+\frac{DSC}{E} \right )}} \right ]$$
$+\left [ \sum_{k=1}^{N}\frac{100 \times \frac{rate}{frequency}}{\left ( 1+\frac{yld}{frequency} \right )^{\left ( k-1+\frac{DSC}{E} \right )}} \right ]$
$-\left ( 100 \times \frac{rate}{frequency} \times \frac{A}{E}\right )$
Where,
DSC = number of days from settlement to next coupon date.
E = number of days in coupon period in which the settlement date falls.
A = number of days from beginning of coupon period to settlement date.
When N = 1 (N is the number of coupons payable between the settlement date and redemption date), PRICE is calculated as follows −
$$DSR = E-A$$
$$T1 = 100*\frac{rate}{frequency}+redemption$$
$$T2 = \frac{yld}{frequency} * \frac{DSR}{E}+1$$
$$T3 = 100 *\frac{rate}{frequency}*\frac{A}{E}$$
$$price = \frac{T1}{T2}-T3$$
Dates should be entered by using the DATE Function, or as results of other formulas or functions. For example, use DATE (2008,5,23) for the 23rd day of May, 2008. Problems can occur if dates are entered as text.
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, then −
the issue date would be January 1, 2008.
the settlement date would be July 1, 2008.
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 Excel date, PRICE returns the #VALUE! error value.
If any of the specified arguments is non-numeric, 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.
Applicability
Excel 2007, Excel 2010, Excel 2013, Excel 2016