PRICEDISC function: Description, Usage, Syntax, Examples and Explanation
What is PRICEDISC function in Excel?
PRICEDISC function is one of Financial functions in Microsoft Excel that returns the price per $100 face value of a discounted security.
Syntax of PRICEDISC function
PRICEDISC(settlement, maturity, discount, redemption, [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.
The PRICEDISC 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.
- Discount: The security’s discount rate.
- Redemption: The security’s redemption value per $100 face value.
- Basis(Optional): The type of day count basis to use.
Basis | Day count basis |
0 or omitted | US (NASD) 30/360 |
1 | Actual/actual |
2 | Actual/360 |
3 | Actual/365 |
4 | European 30/360 |
PRICEDISC formula explanation
- 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.
- 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, and basis are truncated to integers.
- If settlement or maturity is not a valid date, PRICEDISC returns the #VALUE! error value.
- If discount ≤ 0 or if redemption ≤ 0, PRICEDISC returns the #NUM! error value.
- If basis < 0 or if basis > 4, PRICEDISC returns the #NUM! error value.
- If settlement ≥ maturity, PRICEDISC returns the #NUM! error value.
- PRICEDISC is calculated as follows:where:
- B = number of days in year, depending on year basis.
- DSM = number of days from settlement to maturity.
Example of PRICEDISC function
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 | Argument description | |
2/16/2008 | Settlement date | |
3/1/2008 | Maturity date | |
5.25% | Percent discount rate | |
$100 | Redemption value | |
2 | Actual/360 basis | |
Formula | Description | Result |
=PRICEDISC(A2,A3,A4,A5,A6) | The bond price, for the bond with the arguments specified in cells A2:A6. | $99.80 |