Price Function in Excel

Price in Excel (Table of Contents)

• Price Function in Excel
• Price Formula
• How to use the Price in Excel?

Price Function in Excel

The Price in Excel is categorized under Financial functions. The Price excel  function is used to calculate the price of a security/bond, per $100 face value of a security that pays a periodic interest.

Price Formula

The Price formula has 7 arguments:

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Explanation of Price in Excel

1. Settlement : Settlement is referred as the date on which the bond settled. The value mentioned as settlement is the date after the issuing date when the bond/security is traded to the security buyer.
2. Maturity : The date mentioned as Maturity is the date when the security/bond expires, and the principal amount is paid back to the bond holder
3. Rate : The bonds annual interest rate at which coupon payments are made.
4. Yld : The security’s annual yield i.e the annual market interest rate representative of the risk of the bond.
5. Redemption : The bond value per $100 face value that is paid back on the redemption date
6. Frequency : The number of times coupon payments done per year.

7. Basis : This is optional integer argument which specify the financial day counting basis

 

How to use the Price Function in Excel ?

Price Excel function is very simple and easy to use. Let’s understands the working of Price Excel Function with examples.

Price in Excel Example #1

Suppose we are given the following data to calculate the price in excel

The following screenshot is used illustrates how PRICE function excel is used to price a bond.

Things to be Remember while using Excel Price Function

• For Calculation purpose, the Date format in Excel is sequential. So By default, Value 1 stands for 1^st January, 1900 , so the next day i.e 2^nd January 1900 would be 2
• All the Data parameters used as Settlement, maturity, frequency, and basis value should be integers.
• If maturity or the settlement day is not a valid date, then the formula PRICE returns the #VALUE! error value.
• If yld < 0 or if rate < 0 or redemption ≤ 0 PRICE returns the #NUM! error value.
• If frequency mentioned in the price formula is any other value apart from 1, 2, or 4, PRICE will return the #NUM! error value as answer.
• If basis < 0 or if basis > 4, PRICE returns the #NUM! error value.
• If settlement value ≥ maturity value then PRICE returns will return #NUM! error value.

You can download this Price in Excel template here –  Price Function Excel Template

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This has been a guide to Price Excel Function. Here we discuss the Price Formula and how to use Price in Excel along with practical examples and downloadable excel templates. You may also look at these useful functions in excel

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