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Welcome back to our regular blog of Excel functions from A to Z. Today we look at the DTO function.
The DISC function
The discount rate is the interest rate charged on loans and also refers to the interest rate used in discounted cash flow analysis to determine the present value of future cash flows. This function returns the discount rate of a security.
The DTO The function uses the following syntax to operate:
DISC (liquidation, expiration, pr, redemption, [basis])
The DTO The function has the following arguments:
- settlement: This is mandatory and represents the settlement date of the security. The settlement date of the security is the date after the issue date when the security is traded with the buyer.
- maturity: this is also necessary. This is the maturity date of the security. The maturity date is the date on which the security expires.
- pr: Again required. This denotes the price of the security per nominal value of $ 100
- redemption: required. This is the redemption value of the security per nominal value of $ 100
- base: this argument is optional. This is the day count basis to be used.
It should also be noted that:
- Microsoft Excel stores dates as sequential serial numbers so they can be used in calculations. By default, the 1 of January of 1900 is the serial number 1 and the 1 of January of 2008 is the serial number 39448 because it is 39,448 days after 1 of January of 1900.
- the settlement date is the date a buyer purchases a coupon, as a bonus. The expiration date is the date a coupon expires. For instance, Suppose a bond is issued to 30 years the 1 of January of 2008 and a buyer buys it six months later. The issue date would be 1 of January of 2008, the settlement date would be 1 July 2008 and the expiration date would be 1 of January of 2038, 30 years after the date of issue of the 1 of January of 2008
- settlement, maturity Y base they are truncated to integers
- And settlement O maturity is not a valid serial date number, DTO return the #VALUE! error value
- And pr ≤ 0 o si redemption ≤ 0, DTO return the #ON ONE! error value
- And base <0 o si base > 4, DTO return the #ON ONE! error value
- And settlement ≥ maturity, DTO return the #ON ONE! error value
- DTO is calculated as follows:
where:
- B = number of days in a year, depending on the year base
- DSM = number of days between settlement Y maturity.
Please, see my example below:
Soon we will continue with our functions from A to Z of Excel. Keep checking: there is a new blog post every business day.
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