Advanced Excel Financial - YIELD Function

Description

The YIELD function returns the yield on a security that pays periodic interest. Use YIELD to calculate bond yield.

Syntax

YIELD (settlement, maturity, rate, pr, 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
Pr The security's price per $100 face value. Required
Redemption The security's redemption value per $100 face value. Required
Frequency

The number of coupon payments per year.

  • for annual payments, frequency = 1
  • for semiannual, frequency = 2
  • for quarterly, frequency = 4
 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

  • 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, YIELD returns the #VALUE! error value.

  • If any of the specified arguments is non-numeric, YIELD returns the #VALUE! error value.

  • If rate < 0, YIELD returns the #NUM! error value.

  • If pr ≤ 0 or if redemption ≤ 0, YIELD returns the #NUM! error value.

  • If frequency is any number other than 1, 2, or 4, YIELD returns the #NUM! error value.

  • If basis < 0 or if basis > 4, YIELD returns the #NUM! error value.

  • If settlement ≥ maturity, YIELD returns the #NUM! error value.

  • If there is one coupon period or less until redemption, YIELD is calculated as follows

    $YIELD = \frac{\left ( \frac{redemption}{100} + \frac{rate}{frequency} \right ) - \left ( \frac{par}{100} + \left ( \frac{A}{E} \times \frac{rate}{frequency}\right ) \right )}{\frac{par}{100}+\left ( \frac{A}{E} \times \frac{rate}{frequency}\right )} \times \frac{frequency \times E}{DSR}$

    Where,

    A = number of days from the beginning of the coupon period to the settlement date (accrued days).

    DSR = number of days from the settlement date to the redemption date.

    E = number of days in the coupon period.

  • If there is more than one coupon period until redemption, YIELD is calculated through a hundred iterations. The resolution uses the Newton method, based on the formula used for the PRICE Function. The yield is changed until the estimated price given the yield is close to price.

Applicability

Excel 2007, Excel 2010, Excel 2013, Excel 2016

Example

YIELD Function
advanced_excel_financial_functions.htm
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