Microsoft Office Tutorials and References
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Using INTRATE to Back into the Coupon Interest Rate
Using
Using INTRATE
INTRATE to Back into the Coupon Interest Rate
to Back into the Coupon Interest Rate
If you have a fully invested bond and know what it will pay on maturity,
you can use Excel s INTRATE function to back into the interest rate.
Syntax
INTRATE(settlement,maturity,investment,redemption,basis)
The INTRATE function returns the interest rate for a fully invested secur-
ity. This function takes the following arguments:
settlement
settlement This is the security s settlement date.
maturity
maturity This is the security s maturity date.
investment
investment This is the amount invested in the security.
redemption
redemption This is the amount to be received at maturity.
basis
basis This is the type of day count basis to use. You use 0 for U.S.
bonds.
The settlement, maturity, and basisarguments are truncated to integers. If
settlementor maturityis not a valid date, INTRATE returns a #NUM! error.
If investmentis less than or equal to 0 or if redemptionis less than or equal
to 0, INTRATE returns a #NUM! error. If basisis less than 0 or if basisis
greater than 4, INTRATE returns a #NUM! error. If settlementis greater than
or equal to maturity, INTRATE returns a #NUM! error.
INTRATE calculates
(Redemption value Investment) / Investment
and multiplies this by
(Number of days in year / Days from settlementto maturity).
In Figure 13.20 , Excel uses INTRATE to back into the interest rate that the
bond is paying.
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