Microsoft Office Tutorials and References
In Depth Information
Using YIELD to Calculate a Bond’s Yield
basis — This is a code used to identify the number of days in a year.
The values are the same as those available in the YEARFRAC func-
tion. For most U.S. bonds, basisis 0 to indicate a 30/360 NASD calen-
dar. For European bonds, consult Excel Help for the YIELD function.
YIELD to Calculate a Bond ’ s Yield
to Calculate a Bond ’ s Yield
A $1,000 bond might promise to pay 3% interest. However, if you buy the bond
on the secondary market for $95, the actual yield will not be 3%. As you are
trying to compare various investments, comparing the yield is one way to de-
cide between multiple investment opportunities. To do this, you can use Ex-
cel ’ s YIELD function.
The YIELD function returns the yield on a security that pays periodic in-
terest. You use YIELD to calculate bond yield. This function takes the fol-
settlement — This is the security ’ s settlement date. The security
settlement date is the date after the issue date when the security is
traded to the buyer. Dates may be entered as the following:
• Text strings within quotation marks, such as "9/1/2015" and "2015/
• Serial numbers such as 42248, which represents September 1, 2015
• Results of other formulas or functions, such as DATE(2015,9,1)
maturity — This is the security ’ s maturity date. The maturity date
is the date when the security expires.
rate — This is the security ’ s annual coupon rate.
• ppr — This is the security ’ s price per $100 face value.
redemption — This is the security ’ s redemption value per $100 face