YIELD

See Also

Returns the yield on a security that pays periodic interest. Use YIELD to calculate bond yield.

If this function is not available, and returns the #NAME? error, install and load the Analysis ToolPak add-in.

How?

Syntax

YIELD(settlement,maturity,rate,pr,redemption,frequency,basis)

Important  Dates should be entered by using the DATE function, or as results of other formulas or functions. For example, use DATE(2008,5,23) for the 23rd day of May, 2008. Problems can occur if dates are entered as text.

Settlement    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.

Maturity    is the security's maturity date. The maturity date is the date when the security expires.

Rate    is the security's annual coupon rate.

Pr    is the security's price per $100 face value.

Redemption    is the security's redemption value per $100 face value.

Frequency    is the number of coupon payments per year. For annual payments, frequency = 1; for semiannual, frequency = 2; for quarterly, frequency = 4.

Basis    is the type of day count basis to use.

• Microsoft Excel stores dates as sequential serial numbers so they can be used in calculations. By default, January 1, 1900 is serial number 1, and January 1, 2008 is serial number 39448 because it is 39,448 days after January 1, 1900. Microsoft Excel for the Macintosh uses a different date system as its default.
• The settlement date is the date a buyer purchases a coupon, such as a bond. The maturity date is the date when a coupon expires. For example, suppose a 30-year bond is issued on January 1, 2008, and is purchased by a buyer six months later. The issue date would be January 1, 2008, the settlement date would be July 1, 2008, and the maturity date would be January 1, 2038, which is 30 years after the January 1, 2008, issue date.
• Settlement, maturity, frequency, and basis are truncated to integers.
• If settlement or maturity is not a valid date, YIELD returns the #VALUE! error value.
• If rate < 0, YIELD returns the #NUM! error value.
• If pr ≤ 0 or if redemption ≤ 0, YIELD returns the #NUM! error value.
• If frequency is any number other than 1, 2, or 4, YIELD returns the #NUM! error value.
• If basis < 0 or if basis > 4, YIELD returns the #NUM! error value.
• If settlement ≥ maturity, YIELD returns the #NUM! error value.
• If there is one coupon period or less until redemption, YIELD is calculated as follows:

  

  where:

  A = number of days from the beginning of the coupon period to the settlement date (accrued days).

  DSR = number of days from the settlement date to the redemption date.

  E = number of days in the coupon period.

• If there is more than one coupon period until redemption, YIELD is calculated through a hundred iterations. The resolution uses the Newton method, based on the formula used for the function PRICE. The yield is changed until the estimated price given the yield is close to price.

Example

The example may be easier to understand if you copy it to a blank worksheet.

How?

Note  To view the number as a percentage, select the cell and click Cells on the Format menu. Click the Number tab, and then click Percentage in the Category box.