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PRICEDISC Function

Calculates the price of a bond per $100 face value of a discounted security

What is the PRICEDISC Function?

The PRICEDISC function is categorized under Financial functions. It will calculate the price of a bond per $100 face value of a discounted security.

In financial analysis, PRICEDISC can be useful when we wish to borrow money by selling bonds instead of stocks. If we know the redemption value, interest rate, and the start and end dates, we can calculate the bond’s price using the function.

 

Formula

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

 

The PRICEDISC function uses the following arguments:

  1. Settlement (required argument) – It the security’s settlement date or the date the coupon is purchased. The security’s settlement date should be after the issue date.
  2. Maturity (required argument) – It is the security’s maturity date or the date when security expires.

To understand settlement and maturity, let’s take an example. For a 30-year bond that was issued on January 1, 2017, and is purchased by a buyer six months later. The issue date would be January 1, 2017, the settlement date would be July 1, 2017, and the maturity date would be January 1, 2047, which is 30 years after the January 1, 2017 issue date.

  1. Discount (required argument) – It is the discount rate of the security.
  2. Redemption (required argument) – It is the redemption value of the security per $100 face value.
  3. Basis (optional argument) – It specifies the financial day count basis that is used by the security.

 

BasisDay Count basis
0 or omittedUS(NASD) 30/360
1Actual/actual
2Actual/360
3Actual/365
4European 30/360

 

How to use the PRICEDISC Function in Excel?

As a worksheet function, PRICEDISC can be entered as part of a formula in a cell of a worksheet. To understand the uses of the function, let us consider an example:

 

Example

If we wish to calculate the price per $100 face value of a security that was discounted and purchased on April 1, 2017. The maturity date of security is March 31, 2021. The rate of discount is 2.5%. The redemption value is $100. The US (NASD) 30/360 day count basis is used. We provide references to the cells in the formula.

 

PRICEDISC Function

 

We get the result below:

 

PRICEDISC Function - Example

 

The above PRICEDISC function returns the value 90.00 (rounded off to 2 decimal points). The price of the security with the above terms would be $90. In the above example:

  1. As recommended by Microsoft Excel, we provided as input the settlement and maturity as references to cells containing dates.
  2. The discount rate is provided as input in percentage form, 2.5%. However, the argument can instead be entered as the simple numerical value 0.025.
  3. If the [basis] argument it is omitted, the function will use the default value 0 (denoting the US (NADS) 30/360 day count basis). Here, we provided it as 0.

 

Few notes about the PRICEDISC Function:

  1. #NUM! error – Occurs if either:
    1. Settlement date is greater than or equal to maturity date;
    2. When we provide invalid numbers for the arguments: the rate of discount, redemption or basis. That is, we have provided discount rate is less than or equal to zero, redemption value is less than or equal to less than zero or basis is a number other than 0,1,2,3,4.
  2. #VALUE! error – Occurs if:
    1. The given settlement or maturity arguments are invalid Excel dates.
    2. Any of the given arguments are non-numeric.

 

 

Click here to download the sample Excel file

 

Additional resources

Thanks for reading CFI’s guide to important Excel functions! By taking the time to learn and master these functions, you’ll significantly speed up your financial analysis. To learn more, check out these additional resources:

  • Excel Functions for Finance
  • Advanced Excel Formulas Course
  • Advanced Excel Formulas You Must Know
  • Excel Shortcuts for PC and Mac

Free Excel Tutorial

To master the art of Excel, check out CFI’s FREE Excel Crash Course, which teaches you how to become an Excel power user.  Learn the most important formulas, functions, and shortcuts to become confident in your financial analysis.

 

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