 # PRICEDISC

In this comprehensive guide, we will explore the PRICEDISC function in Excel, which is used to calculate the price per \$100 face value of a discounted security. This function is particularly useful for financial analysts and investors who deal with bonds and other fixed-income securities. We will cover the syntax, examples, tips and tricks, common mistakes, troubleshooting, and related formulae for the PRICEDISC function.

## PRICEDISC Syntax

The PRICEDISC function has the following syntax:

=PRICEDISC(settlement, maturity, discount, redemption, basis)

Where:

• settlement is the settlement date, which is the date when the security is purchased.
• maturity is the maturity date, which is the date when the security expires.
• discount is the discount rate of the security.
• redemption is the redemption value per \$100 face value of the security.
• basis (optional) is the day count basis to be used. If omitted, it defaults to 0, which represents the US (NASD) 30/360 day count basis. Other available options are: 1 for actual/actual, 2 for actual/360, 3 for actual/365, and 4 for European 30/360.

## PRICEDISC Examples

Let’s look at some examples of using the PRICEDISC function in Excel:

Example 1: Calculate the price per \$100 face value of a discounted security with a settlement date of January 1, 2020, a maturity date of December 31, 2020, a discount rate of 5%, and a redemption value of \$100.

=PRICEDISC(“2020-01-01”, “2020-12-31”, 0.05, 100)

This formula will return the price per \$100 face value of the security, which is approximately \$95.14.

Example 2: Calculate the price per \$100 face value of a discounted security with a settlement date of January 1, 2020, a maturity date of December 31, 2020, a discount rate of 5%, a redemption value of \$100, and using the actual/actual day count basis.

=PRICEDISC(“2020-01-01”, “2020-12-31”, 0.05, 100, 1)

This formula will return the price per \$100 face value of the security, which is approximately \$95.08, using the actual/actual day count basis.

## PRICEDISC Tips & Tricks

• Ensure that the settlement and maturity dates are entered as valid Excel date values. You can use the DATE function to create a date value, e.g., DATE(2020, 1, 1) for January 1, 2020.
• Enter the discount rate as a decimal value. For example, if the discount rate is 5%, enter it as 0.05.
• When comparing different securities, make sure to use the same day count basis for consistency.
• Use the PRICEDISC function in conjunction with other financial functions, such as YIELDDISC, to analyze the performance of discounted securities.

## Common Mistakes When Using PRICEDISC

• Using incorrect date formats for the settlement and maturity dates. Make sure to use valid Excel date values.
• Entering the discount rate as a percentage instead of a decimal value. For example, entering 5 instead of 0.05 for a 5% discount rate.
• Forgetting to specify the day count basis when comparing different securities, which may lead to inconsistent results.

## Why Isn’t My PRICEDISC Working?

If you encounter issues with the PRICEDISC function, consider the following troubleshooting steps:

• Check the settlement and maturity dates for correct formatting and valid Excel date values.
• Ensure that the discount rate is entered as a decimal value, not a percentage.
• Verify that the redemption value is entered correctly.
• Make sure that the day count basis, if specified, is within the valid range of 0 to 4.
• Check for any error messages, such as #NUM! or #VALUE!, which may indicate issues with the input values or calculation.

## PRICEDISC: Related Formulae

Here are some related Excel functions that can be used in conjunction with the PRICEDISC function for financial analysis:

• YIELDDISC: Calculates the annual yield for a discounted security.
• PRICE: Calculates the price per \$100 face value of a security that pays periodic interest.
• YIELD: Calculates the yield on a security that pays periodic interest.
• COUPNUM: Calculates the number of coupons payable between the settlement date and maturity date.
• ACCRINT: Calculates the accrued interest for a security that pays periodic interest.

By mastering the PRICEDISC function and its related formulae, you can effectively analyze and compare the performance of various discounted securities in Excel.

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