Microsoft Office Tutorials and References
In Depth Information
Syntax
Syntax
YIELDDISC(settlement_date,matur-
ity_date,price_per_\$100_face_value,redemp-
tion_value_per_\$100_of_face_value,day_basis)
The YIELDDISC function returns the annual yield for a discounted security.
Calculating T-Bills
Calculating T-Bills
Treasury bills, which are also referred to as T-bills, are a popular
short-term investment. Backed by the U.S. government, T-bills are considered
one of the safest investments, although they offer a slightly lower interest
rate than other types of investments.
The Federal Reserve uses a strange method for advertising the yield on T-
bills: The Fed compares the total interest to the final value paid on matur-
ity. This is backward from every other bond yield.
For example, suppose that you pay \$98.70 for a T-bill that will pay \$100 on
maturity 13 weeks later. The Fed expresses the yield by comparing the \$1.30
in interest to the \$100 final value. Every other bond yield compares the \$1.30
in interest to the \$98.70 invested.
The Excel TBILL functions enable you to compare T-bills and regular bonds.
Figure 13.24 illustrates the three T-bill functions.
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