CFI-Excel-eBook

The Corporate Finance Institute Excel
YIELD
Get the yield on a security
settlement maturity rate pr
redemption frequency basis
What is the YIELD Function?
The YIELD Function is categorized under Financial functions. It will calculate the
yield on a security that pays periodic interest. The function is generally used to
calculate the bond yield.
As a financial analyst, we often calculate the yield on a bond to determine the
income that would be generated in a year. Yield is different from the rate of
return as the latter return is the gain already earned while former is the
prospective return.
Formula
= YIELD(settlement, maturity, rate, pr, redemption, frequency, [basis])
This function uses the following arguments:
1. Settlement (required argument) – It is the settlement date of the security.
It is a date after the security is traded to the buyer that is after the issue
date.
2. Maturity (required argument) – It is the maturity date of the security. It is
the date when the security expires.
3. Rate (required argument) – It is the annual coupon rate.
4. Pr (required argument) – It is the price of security per $100 face value.
5. Redemption (required argument) – It is the redemption value per $100
face value.
6. Frequency (required argument) – It is the number of coupon payments per
year. It must be either of the following: 1 – Annually, 2 – Semi-annually, 4 –
Quarterly
7. [basis] (optional argument) – It specifies the financial day count basis that
is used by security. The possible values are:
Basis
Day Count basis
0 or omitted US(NASD) 30/360
1 Actual/actual
2 Actual/360
3 Actual/365
4 European 30/360
The settlement and maturity dates should be supplied to the YIELD function as either:
• References to cells containing dates; or
• Dates returned from formulas.
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