CFI-Excel-eBook

Recommendations

Info

The Corporate Finance Institute ExcelFinancialDURATIONGet the duration of a securitysettlement maturity couponyield frequency basisWhat is the DURATION Function?The DURATION function is categorized under Financial functions. It helps tocalculate the Macauley Duration. The function calculates the duration of asecurity that pays interest on a periodic basis with a par value of $100.DURATION is commonly used by Portfolio Managers who use theimmunization strategy. Apart from it, the function is also useful in financialmodeling, particularly in predicting future cash flows of investments.Formula=DURATION(settlement, maturity, coupon, yield, frequency, [basis])The DURATION function uses the following arguments:1. Settlement (required argument) – It is the security’s settlement date orthe date on which the coupon is purchased.2. Maturity (required argument) – It is the security’s maturity date or thedate on which the coupon expires.3. Coupon (required argument) – It is the security’s coupon rate.4. Yield (required argument) – It is the security’s annual yield.5. Frequency (required argument) – It is the number of coupon paymentsper year. For annual payments, the frequency is = 1; for semiannual,frequency is = 2; and for quarterly, frequency = 4.6. Basis (optional argument) – It is the type of day count basis to be used.The possible values of basis are:BasisDay Count Basis0 or omitted US(NASD) 30/3601 Actual/actual2 Actual/3603 Actual/3654 European 30/360corporatefinanceinstitute.com60
The Corporate Finance Institute ExcelRemember that the date arguments should be encoded into the DURATIONfunction as either:• References to cells containing dates; or• Dates returned from formulasSuppose If we try to input text representations of dates into Excel functions,they may be interpreted differently, depending on the date system and dateinterpretation settings on our computer.How to use the DURATION Function in Excel?As a worksheet function, DURATION can be entered as part of a formula in acell of a worksheet. To understand the uses of the function, let us consider afew examples:corporatefinanceinstitute.com61
Page 1 and 2:
The Corporate Finance InstituteExce
Page 3 and 4:
The Corporate Finance Institute Exc
Page 5 and 6:
Page 7 and 8:
Page 9 and 10: The Corporate Finance Institute Exc
Page 25 and 26: The Corporate Finance InstituteExce
Page 59: The Corporate Finance Institute Exc
Page 111 and 112:
Page 113 and 114:
Page 115 and 116:
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
show all

CFI-Excel-eBook

Create successful ePaper yourself

Delete template?

Save as template?