logo-v-light

Our Service

YIELDDISC

In this comprehensive guide, we will explore the YIELDDISC function in Excel, which is used to calculate the annual yield for a discounted security, such as a Treasury bill. This function is particularly useful for investors and financial analysts who need to evaluate the performance of their investments. We will cover the syntax of the YIELDDISC function, provide examples to illustrate its use, share tips and tricks for getting the most out of this function, discuss common mistakes, and suggest related formulae that you might find helpful.

YIELDDISC Syntax

The YIELDDISC function in Excel has the following syntax:

YIELDDISC(settlement, maturity, pr, redemption, [basis])

Here’s a breakdown of the arguments in the YIELDDISC function:

  1. settlement: The settlement date of the security, which is the date when the buyer takes ownership. This should be entered as a date value.
  2. maturity: The maturity date of the security, which is the date when the security expires. This should also be entered as a date value.
  3. pr: The security’s price per $100 face value.
  4. redemption: The security’s redemption value per $100 face value.
  5. [basis] (optional): The day count basis to be used in the calculation. If omitted, the default value is 0. The available options are:
  6. 0 – US (NASD) 30/360
  7. 1 – Actual/actual
  9. 2 – Actual/360
  11. 3 – Actual/365
  13. 4 – European 30/360

YIELDDISC Examples

Let’s look at some examples of how to use the YIELDDISC function in Excel:

  1. Basic YIELDDISC calculation: Suppose you have a Treasury bill with a settlement date of January 1, 2022, a maturity date of June 30, 2022, a price of $98, and a redemption value of $100. To calculate the annual yield, you would use the following formula:

    2. =YIELDDISC(“2022-01-01”, “2022-06-30”, 98, 100)This would return the annual yield as a decimal value, which you can then format as a percentage.

  2. YIELDDISC with a custom day count basis: If you want to use a different day count basis, you can include the optional [basis] argument. For example, to use the Actual/365 basis, you would use the following formula:

    3. =YIELDDISC(“2022-01-01”, “2022-06-30”, 98, 100, 3)This would return the annual yield using the Actual/365 day count basis.

YIELDDISC Tips & Tricks

Here are some tips and tricks to help you get the most out of the YIELDDISC function in Excel:

  1. When entering dates as arguments, make sure to use a recognized date format, such as “YYYY-MM-DD” or “MM/DD/YYYY”. You can also use cell references that contain date values.
  2. Remember that the YIELDDISC function returns the annual yield as a decimal value. To display the result as a percentage, format the cell containing the formula as a percentage.
  3. If you’re working with a large dataset, consider using a table to organize your data and make it easier to reference cell values in your YIELDDISC formula.

Common Mistakes When Using YIELDDISC

Here are some common mistakes to avoid when using the YIELDDISC function:

  1. Using incorrect date formats for the settlement and maturity arguments. Make sure to use a recognized date format or a cell reference containing a date value.
  2. Forgetting to format the result as a percentage. The YIELDDISC function returns a decimal value, so you’ll need to format the cell as a percentage to display the annual yield correctly.
  3. Using an invalid value for the [basis] argument. Make sure to use a value between 0 and 4, as described in the syntax section above.

Why Isn’t My YIELDDISC Working?

If you’re having trouble with the YIELDDISC function, consider the following troubleshooting tips:

  1. Check your date formats for the settlement and maturity arguments. Make sure they are in a recognized date format or use cell references containing date values.
  2. Ensure that the price and redemption values are entered correctly and are in the same units (e.g., per $100 face value).
  3. Verify that the [basis] argument, if used, is a valid value between 0 and 4.
  4. If you’re still having issues, double-check your formula for any typos or syntax errors.

YIELDDISC: Related Formulae

Here are some related formulae that you might find helpful when working with the YIELDDISC function:

  1. YIELD: Calculates the yield of a security that pays periodic interest, such as a bond.
  2. YIELDMAT: Calculates the annual yield of a security that pays interest at maturity, such as a zero-coupon bond.
  3. PRICE: Calculates the price per $100 face value of a security that pays periodic interest.
  4. PRICEDISC: Calculates the price per $100 face value of a discounted security, such as a Treasury bill.
  5. PRICEMAT: Calculates the price per $100 face value of a security that pays interest at maturity, such as a zero-coupon bond.

In conclusion, the YIELDDISC function in Excel is a powerful tool for calculating the annual yield of discounted securities, such as Treasury bills. By understanding its syntax, using it effectively in various scenarios, and avoiding common mistakes, you can make informed decisions about your investments and better analyze the performance of your financial assets.

Related

Did you find this article useful?

Share it with your friends or colleagues

About Aepoch Advisors

We are a boutique accounting and consulting firm servicing international businesses operating in China. We offers book keeping and business advisory service. We also help our clients select and implement SAAS business applications. 
 
Cloud technology significantly reduces cost foreign companies traditionally spent on tax compliance and ERP systems. Our cloud professionals can help with streamlining your management and controling structure, as well as advising you on how to reduce risks and maximize profits with software purposely built for Chinese business. Contact us today to learn more about our services.
Learn More