Excel functions

How to Use the PRICE Function in Excel

Today, we’ll explore a highly useful Excel and Google Sheets function known as the PRICE function. This function is integral in financial analysis for computing the price per $100 face value of a security that disburses periodic interest. Let’s delve into the workings of the PRICE function across both platforms.

Function Syntax

The syntax for the PRICE function is consistent in Microsoft Excel and Google Sheets:

PRICE(settlement, maturity, rate, yld, redemption, frequency, [basis])
  • settlement: The security’s settlement date.
  • maturity: The security’s maturity date.
  • rate: The annual coupon rate.
  • yld: The security’s annual yield.
  • redemption: The redemption value per $100 face value of the security.
  • frequency: The number of coupon payments per year (1 for annual, 2 for semi-annual).
  • basis: (Optional) Day count basis to be used (0 or omitted signifies US (NASD) 30/360, 1 for Actual/Actual, 2 for Actual/360, 3 for Actual/365, 4 for European 30/360).

Example Tasks

Here are some scenarios where the PRICE function can be utilized:

Calculating the Price of a Bond

Consider a bond characterized by these parameters:

  • Settlement date: 01/01/2023
  • Maturity date: 01/01/2030
  • Annual coupon rate: 5%
  • Annual yield: 6%
  • Redemption value: $1000
  • Frequency: 2 (semi-annual)

To calculate this bond’s price using the PRICE function, apply the following formula:

=PRICE("01/01/2023", "01/01/2030", 0.05, 0.06, 1000, 2)

This formula yields the bond’s price per $100 face value.

Using the PRICE Function to Compare Bonds

The PRICE function is also valuable for comparing the financial nuances of different bonds. Altering the yield parameter facilitates an understanding of how fluctuating yields influence the bond’s price. Consequently, this insight aids investors in making well-informed decisions that align with their investment goals and risk appetite.

As demonstrated, the PRICE function serves as a crucial tool in financial analysis, supporting a variety of tasks related to bond valuation and investment strategy formulation.

More information: https://support.microsoft.com/en-us/office/price-function-3ea9deac-8dfa-436f-a7c8-17ea02c21b0a

Other functions
ACCRINT
Returns the accrued interest for a security that pays periodic interest
ACCRINTM
Returns the accrued interest for a security that pays interest at maturity
AMORDEGRC
Returns the depreciation for each accounting period by using a depreciation coefficient
AMORLINC
Returns the depreciation for each accounting period
COUPDAYBS
Returns the number of days from the beginning of the coupon period to the settlement date
COUPDAYS
Returns the number of days in the coupon period that contains the settlement date
COUPDAYSNC
Returns the number of days from the settlement date to the next coupon date
COUPNCD
Returns the next coupon date after the settlement date
COUPNUM
Returns the number of coupons payable between the settlement date and maturity date
COUPPCD
Returns the previous coupon date before the settlement date
CUMIPMT
Returns the cumulative interest paid between two periods
CUMPRINC
Returns the cumulative principal paid on a loan between two periods
DB
Returns the depreciation of an asset for a specified period by using the fixed-declining balance method
DDB
Returns the depreciation of an asset for a specified period by using the double-declining balance method or some other method that you specify
DISC
Returns the discount rate for a security
DOLLARDE
Converts a dollar price, expressed as a fraction, into a dollar price, expressed as a decimal number
DOLLARFR
Converts a dollar price, expressed as a decimal number, into a dollar price, expressed as a fraction
DURATION
Returns the annual duration of a security with periodic interest payments
EFFECT
Returns the effective annual interest rate
FV
Returns the future value of an investment
FVSCHEDULE
Returns the future value of an initial principal after applying a series of compound interest rates
INTRATE
Returns the interest rate for a fully invested security
IPMT
Returns the interest payment for an investment for a given period
IRR
Returns the internal rate of return for a series of cash flows
ISPMT
Calculates the interest paid during a specific period of an investment
MDURATION
Returns the Macauley modified duration for a security with an assumed par value of $100
MIRR
Returns the internal rate of return where positive and negative cash flows are financed at different rates
NOMINAL
Returns the annual nominal interest rate
NPER
Returns the number of periods for an investment
NPV
Returns the net present value of an investment based on a series of periodic cash flows and a discount rate
ODDFPRICE
Returns the price per $100 face value of a security with an odd first period
ODDFYIELD
Returns the yield of a security with an odd first period
ODDLPRICE
Returns the price per $100 face value of a security with an odd last period
ODDLYIELD
Returns the yield of a security with an odd last period
PDURATION
Returns the number of periods required by an investment to reach a specified value
PMT
Returns the periodic payment for an annuity
PPMT
Returns the payment on the principal for an investment for a given period
PRICEDISC
Returns the price per $100 face value of a discounted security
PRICEMAT
Returns the price per $100 face value of a security that pays interest at maturity
PV
Returns the present value of an investment
RATE
Returns the interest rate per period of an annuity
RECEIVED
Returns the amount received at maturity for a fully invested security
RRI
Returns an equivalent interest rate for the growth of an investment
SLN
Returns the straight-line depreciation of an asset for one period
SYD
Returns the sum-of-years' digits depreciation of an asset for a specified period
TBILLEQ
Returns the bond-equivalent yield for a Treasury bill
TBILLPRICE
Returns the price per $100 face value for a Treasury bill
TBILLYIELD
Returns the yield for a Treasury bill
VDB
Returns the depreciation of an asset for a specified or partial period by using a declining balance method
XIRR
Returns the internal rate of return for a schedule of cash flows that is not necessarily periodic
XNPV
Returns the net present value for a schedule of cash flows that is not necessarily periodic
YIELD
Returns the yield on a security that pays periodic interest
YIELDDISC
Returns the annual yield for a discounted security; for example, a Treasury bill
YIELDMAT
Returns the annual yield of a security that pays interest at maturity