PRICE
The PRICE function calculates the price per $100 face value of a security that pays periodic interest. It is used in financial analysis and accounting to determine the price of bonds or other fixed income investments.
Syntax 🔗
=PRICE(Settlement, Maturity, Rate, Yield, Redemption, [Frequency], [Basis])
Settlement | The security's settlement date. |
Maturity | The security's maturity date. |
Rate | The security's annual coupon rate. |
Yield | The security's annual yield. |
Redemption | The security's redemption value at maturity. |
Frequency (Optional) | The number of interest payments per year. Defaults to 1 if omitted. |
Basis (Optional) | The day-count basis to use. Defaults to 0 if omitted. |
About PRICE 🔗
The PRICE function in Excel helps you calculate the price per $100 face value of a fixed-income security. This function is useful in financial modeling and analysis to estimate bond values. By using the PRICE function, you can determine the fair market value of bonds and related securities, aiding in your investment decision-making process.
Examples 🔗
To calculate the price of a bond with a settlement date of January 1, 2022, maturity date of December 31, 2025, annual coupon rate of 4%, annual yield of 3.5%, and a redemption value of $1,000, use the following function. The bond makes semi-annual interest payments:
=PRICE("01/01/2022", "12/31/2025", 0.04, 0.035, 1000, 2)
For a security with a settlement date of July 15, 2021, maturity date of September 30, 2023, annual coupon rate of 5%, annual yield of 4.5%, and a redemption value of $500, use this function to compute the price. The security pays interest quarterly:
=PRICE("07/15/2021", "09/30/2023", 0.05, 0.045, 500, 4)
Notes 🔗
Ensure that the dates you provide as arguments are valid Excel date values or references to cells containing valid dates. The PRICE function assumes regular interest payments and redemption at maturity. Adjust the function's parameters to match the specific characteristics of the security you are analyzing, including interest payment frequency and the chosen day-count basis.
Questions 🔗
The PRICE function calculates the price per $100 face value of a security that pays periodic interest. It determines the fair market value of the security based on input parameters such as settlement date, maturity date, coupon rate, yield, redemption value, and optional frequency and basis.
Can the PRICE function handle securities with varying interest payment frequencies?Yes, the PRICE function accommodates securities with different interest payment frequencies by allowing users to specify the number of interest payments per year using the Frequency argument. Users can adjust this parameter to reflect the specific periodicity of interest payments for the security being analyzed.
Pricing securities using functions like PRICE is essential in financial analysis as it provides investors and analysts with crucial insights into the fair value of bonds and fixed income investments. Understanding the price relative to the yield and other parameters aids in decision-making, portfolio management, and risk assessment.
Related functions 🔗
YIELD
YIELDMAT
DISC
INTRATE
MDURATION
DURATION
COUPNUM
COUPDAYBS
COUPDAYSNC
COUPNCD