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ODDFPRICE: Calculating the price of a security with an odd first period

From: Excel 2010: Financial Functions in Depth

Video: ODDFPRICE: Calculating the price of a security with an odd first period

The bond related formulas and functions in the previous chapters assume that every period is the same length. For example, that coupon payments occur every 3, 6 or 12 months. Some bonds have irregular first or last periods where the payment dates don't fit any of those patterns. So Excel includes a set of functions you can use to evaluate those securities. In this movie, I'll show you how to calculate the price for a security that has and odd or unusual first period. To do that we need to know the following things. The first argument for our function is the settlement date.

ODDFPRICE: Calculating the price of a security with an odd first period

The bond related formulas and functions in the previous chapters assume that every period is the same length. For example, that coupon payments occur every 3, 6 or 12 months. Some bonds have irregular first or last periods where the payment dates don't fit any of those patterns. So Excel includes a set of functions you can use to evaluate those securities. In this movie, I'll show you how to calculate the price for a security that has and odd or unusual first period. To do that we need to know the following things. The first argument for our function is the settlement date.

That is the date that you take possession of the security. And next, we have the maturity date and that is the last date of the investment when all monies are due to you. Then the issue date and that is the date that the security was initiated and again that can be different from the date you take possession of it. Then we have the first coupon date and that is the first day that interest is paid to you the bondholder. Then we have the coupon percentage and that is the amount of money paid based on your investment.

Then the percent yield and that is the amount that your investment appreciates over year. Then we have the redemption value and the redemption value is the amount of money you get for the security for $100 of face value. Next, we have frequency and that is the number of coupons paid per year. So that can be either annually which would be 1, semiannually which is 2, or in this case quarterly which is 4. and then finally, we have basis. Basis is the way that you count the number of days in a month and a year.

The standard which is option 0 is for a 30 day month and a 360 day year. In this case, we're going to use option number 1 and that is actual days. So for example, in February, you would count 28 days in a non-leap year and 29 days in a leap year. So now with all that information in place we can create our function. So click in cell C14 and type equal oddfprice and then a left parentheses and the function name means odd or unusual. f is first period and price means that we're trying to find the price that someone should pay for the security if it were priced at exactly market value.

So the first argument is the settlement date that is in cell C3, comma. Then the maturity date is in C4, comma. The issue date is C5 comma. The first coupon is in C6 comma. The rate is in C7 and the yield is in C8, then a comma. The redemption value per 100 is in C9, comma. Frequency and again that's the frequency of coupon and that is in C10, comma, and then we have the basis and that's in C11.

So now I'll type a right parentheses to close out the function and press Tab. When I do, we see that the price for this security should be $111.86. So when you want to calculate the price of a bond with an odd or usual first period, use the ODDFPRICE function.

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This video is part of

Image for Excel 2010: Financial Functions in Depth
Excel 2010: Financial Functions in Depth

52 video lessons · 13182 viewers

Curt Frye
Author

 
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  1. 2m 11s
    1. Welcome
      1m 6s
    2. Using the exercise files
      36s
    3. Disclaimer
      29s
  2. 28m 32s
    1. PMT: Calculating a loan payment
      3m 31s
    2. PPMT and IPMT: Calculating principal and interest per loan payment
      4m 18s
    3. CUMPRINC and CUMIPMT: Calculating cumulative principal and interest paid between periods
      4m 30s
    4. ISPMT: Calculating interest paid during a specific period
      2m 13s
    5. EFFECT and NOMINAL: Finding nominal and effective interest rates
      3m 31s
    6. ACCRINT and ACCRINTM: Calculating accrued interest for investments
      4m 15s
    7. RATE: Discovering the interest rate of an annuity
      2m 41s
    8. NPER: Calculating the number of periods in an investment
      3m 33s
  3. 19m 5s
    1. SLN: Calculating depreciation using the straight-line method
      1m 48s
    2. DB: Calculating depreciation using the declining balance method
      3m 10s
    3. DDB: Calculating depreciation using the double-declining balance method
      3m 20s
    4. SYD: Calculating depreciation for a specified period
      2m 13s
    5. VDB: Calculating declining balance depreciation for a partial period
      3m 24s
    6. AMORDEGRC: Calculating depreciation using a depreciation coefficient
      2m 27s
    7. AMORLINC: Calculating depreciation for each accounting period
      2m 43s
  4. 22m 33s
    1. FV: Calculating the future value of an investment
      2m 48s
    2. FVSCHEDULE: Calculating the future value of an investment with variable returns
      2m 21s
    3. PV: Calculating the present value of an investment
      2m 6s
    4. NPV: Calculating the net present value of an investment
      3m 17s
    5. IRR: Calculating internal rate of return
      2m 33s
    6. XNPV: Calculating net present value given irregular inputs
      2m 32s
    7. XIRR: Calculating internal rate of return for irregular cash flows
      1m 48s
    8. MIRR: Calculating internal rate of return for mixed cash flows
      2m 2s
    9. DISC: Calculating the discount rate of a security
      3m 6s
  5. 24m 12s
    1. COUPDAYBS: Calculating total days between coupon beginning and settlement
      3m 2s
    2. COUPDAYS: Calculating days in the settlement date's coupon period
      2m 48s
    3. COUPDAYSNC: Calculating days from the settlement date to the next coupon date
      3m 1s
    4. COUPNCD: Calculating the next coupon date after the settlement date
      2m 43s
    5. COUPNUM: Calculating the number of coupons between settlement and maturity
      2m 55s
    6. COUPPCD: Calculating the date of a coupon due immediately before settlement
      3m 4s
    7. DURATION: Calculating the annual duration of a security
      3m 20s
    8. MDURATION: Calculating the duration of a security using the modified Macauley method
      3m 19s
  6. 28m 43s
    1. DOLLARDE and DOLLARFR: Converting between fractional prices and decimal prices
      2m 36s
    2. INTRATE: Calculating the interest rate of a fully invested security
      2m 50s
    3. RECEIVED: Calculating the value at maturity of a fully invested security
      2m 46s
    4. PRICE: Calculating the price of a security that pays periodic interest
      3m 19s
    5. PRICEDISC: Calculating the price of a discounted security
      2m 48s
    6. PRICEMAT: Calculating the price of a security that pays interest at maturity
      1m 57s
    7. TBILLEQ: Calculating the bond-equivalent yield for a Treasury bill
      1m 50s
    8. TBILLPRICE: Calculating the price for a Treasury bill
      1m 31s
    9. TBILLYIELD: Calculating the yield of a Treasury bill
      1m 41s
    10. YIELD: Calculating the yield of a security that pays periodic interest
      2m 59s
    11. YIELDDISC: Calculating the annual yield for a discounted security
      2m 9s
    12. YIELDMAT: Calculating the annual yield of a security that pays interest at maturity
      2m 17s
  7. 12m 1s
    1. ODDFPRICE: Calculating the price of a security with an odd first period
      3m 17s
    2. ODDFYIELD: Calculating the yield of a security with an odd first period
      3m 3s
    3. ODDLPRICE: Calculating the price of a security with an odd last period
      2m 44s
    4. ODDLYIELD: Calculating the yield of a security with an odd last period
      2m 57s
  8. 1m 5s
    1. Additional resources
      1m 5s

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