DISC function: Description, Usage, Syntax, Examples and Explanation

What is DISC function in Excel?

DISC function is one of the Financial functions in Microsoft Excel that returns the discount rate for a security.

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

The DISC function syntax has the following arguments:

Settlement: 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: The security’s maturity date. The maturity date is the date when the security expires.
Pr: The security’s price per $100 face value.
Redemption: The security’s redemption value per $100 face value.
Basis (Optional): The type of day count basis to use.

Note: Problems can occur if dates are entered as text. Therefore, all dates should be entered by using the DATE function, or formatted as date under format cell to avoid errors.

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, 2018 is serial number 43101 because it is 43,101 days after January 1, 1900.
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, 2018, and is purchased by a buyer six months later. The issue date would be January 1, 2018, the settlement date would be July 1, 2018, and the maturity date would be January 1, 2048, 30 years after the January 1, 2018, issue date.
Settlement, maturity, and basis are truncated to integers.
If settlement or maturity is not a valid serial date number, DISC returns the #VALUE! error value.
If pr ≤ 0 or if redemption ≤ 0, DISC returns the #NUM! error value.
If basis < 0 or if basis > 4, DISC returns the #NUM! error value.
If settlement ≥ maturity, DISC returns the #NUM! error value.
DISC is calculated as follows:where:
- B = number of days in a year, depending on the year basis.
- DSM = number of days between settlement and maturity.

Steps to follow:

1. Open a new Excel worksheet.

2. Copy data in the following table below and paste it in cell A1

Note: For formulas to show results, select them, press F2 key on your keyboard and then press Enter.

You can adjust the column widths to see all the data, if need be.

Data	Description
07/01/2018	Settlement date
01/01/2048	Maturity date
97.975	Price
100	Redemption value
1	Actual/actual basis (see above)
Formula	Description	Result
=DISC(A2,A3,A4,A5,A6)	The bond discount rate, for a bond with the above terms	0.001038