# Difference between revisions of "Documentation/How Tos/Calc: YIELDDISC function"

## YIELDDISC

Calculates the yield for a non-interest paying discounted bond.

### Syntax:

YIELDDISC(settlementdate; maturitydate; price; redemptionvalue; basis)

settlementdate: the settlement (purchase) date of the bond.
maturitydate: the maturity (redemption) date of the bond.
price: the price of the security, per 100 par value.
redemptionvalue: the redemption value of the bond, per 100 par value.
basis: is the calendar system to use. Defaults to 0 if omitted.
0 - US method (NASD), 12 months of 30 days each
1 - Actual number of days in months, actual number of days in year
2 - Actual number of days in month, year has 360 days
3 - Actual number of days in month, year has 365 days
4 - European method, 12 months of 30 days each

YIELDDISC calculates the annual (uncompounded) yield for a bond which pays no interest (a 'pure discount instrument' or 'discounted zero coupon bond'). It returns:
(redemptionvalue / price - 1) / YEARFRAC(settlementdate; maturitydate; basis).
The companion function PRICEDISC has a 'discount rate' parameter. Note that this is not the same as 'yield', although the two are related, and generally close.

### Example:

YIELDDISC("2008-02-15"; "2008-11-30"; 97.63; 100; 1)

returns approximately 0.0307 or 3.07%. You purchase and settle a bond for \$976.30 on 15 February 2008; the bond will mature on 30 November 2008, yielding its face value of \$1000. The yield is about 3% using the basis 1 calendar system.

### Issues:

• There are (rare) circumstances when the results from Calc and Excel differ, due to the internal use of YEARFRAC.
• The formula uses takes no account of the compounding of interest. It may be most suitable when used with periods up to one year.