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ODDLYIELD: Calculating the yield of a security with an odd last period

From: Excel 2010: Financial Functions in Depth

Video: ODDLYIELD: Calculating the yield of a security with an odd last period

The bond related formulas and functions in the previous chapters assume that every period is of the same length. For example, that coupon payments occur every 3, 6 or 12 months. Some bonds have irregular first or last periods though, which means that the payments dates don't fit any of those patterns. For those securities Excel includes a set of functions you can use to evaluate them. In this movie, I'll show you how to calculate the yield of a security with an odd, meaning unusual, last period. To make that calculation, the first thing we need to no know is the settlement date and that that is the date that you take possession of the security.

ODDLYIELD: Calculating the yield of a security with an odd last period

The bond related formulas and functions in the previous chapters assume that every period is of the same length. For example, that coupon payments occur every 3, 6 or 12 months. Some bonds have irregular first or last periods though, which means that the payments dates don't fit any of those patterns. For those securities Excel includes a set of functions you can use to evaluate them. In this movie, I'll show you how to calculate the yield of a security with an odd, meaning unusual, last period. To make that calculation, the first thing we need to no know is the settlement date and that that is the date that you take possession of the security.

Next we have the maturity date and that is the last day of the investment, when all principle and any other proceeds are returned to you. The last interest date is the last day that any interests through coupons are paid to you. The rate is the annual percentage rate of the investment. Then we have the price which is the price per $100 of face value that you pay. Now in this case the price is more than the face value, but remember that you're also receiving interest as part of your investment. Next is the redemption value.

That's also per $100 of face value and it's almost always going to be 100. Next we have frequency and frequency is the number of times that you are given coupon interest per year. The value can either be one, meaning annual payments, two for semi-annual, or four for quarterly. In this case, we have two so we're getting interest every six months. And then, finally is basis and basis refers to how you count the number of days in a month and year. The North American standard is for a 30 day month and a 360 day year.

However in this case reason option one which is actual and that means that you count every day in the year, differentiating between regular years and leap years. So for example, in a regular year February has 28 days while in a leap year it has 29. So with all that information in place we can create our formula. So I'll click in cell C13, type an equal sign, and then type in the name of the function that I'm going to use and that is odd, l for last, yield.

So we have odd meaning unusual, l for last period, and then yield because we are calculating the yield. Type a left parenthesis and now we can start filling in the cell references for the arguments. First is the settlement date. That's in C3, comma, maturity date C4, comma, the last interest date is C5, comma, the rate is in C6, comma, price is in C7, comma, redemption value C8, comma, frequency is in C9, comma, and the basis is in C10.

Then type a right parenthesis to close out the function and press Tab. When we do that the yield is 5.7 on this investment. So when you want to calculate the yield the of a bond with an odd, meaning unusual, last period, use the oddlyield 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 · 13293 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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