# A to Z of Excel Functions: The PRICE Function

8 January 2024

*Welcome
back to our regular A to Z of Excel Functions blog. Today we look at the PRICE function. *

** **

**The
PRICE function**

Coupon bonds are bonds that pay interest prior to
maturity and those interest payments are paid on a regular schedule which can
occur either one, two or four times a year.
The **PRICE** function returns
the price per $100 face value of such a security that pays periodic interest.

The **PRICE **function
employs the following syntax to operate:

**PRICE(settlement, maturity, rate, yield, redemption, frequency, [basis])**

The **PRICE** function has the following arguments:

**settlement:**this represents the security's settlement date. The security settlement date is the date__after__the issue date when the security is traded to the buyer**maturity:**this is the security's maturity date,*i.e.*when the security expires**rate:**also required, this is the security’s annual coupon rate**yield:**also mandatory, this represents the security’s annual yield**redemption:**also necessary. This is the security’s redemption value per $100 face value**frequency:**The number of coupon payments per year. For annual payments,**frequency**is 1; for semiannual,**frequency**is 2; for quarterly,**frequency**is 4*.*These are the only options*(see below)***basis:**the type of day count basis to use. This is optional. There are five options:

It should be further noted that:

- Microsoft Excel stores dates as sequential serial numbers so they can be used in calculations. By default, January 1, 1900 is serial number 1, and January 1, 2008 is serial number 39448 because it is 39,448 days after January 1, 1900
- dates should be entered
using the
**DATE**function, or as results of other formulae or functions. For example, use**=DATE(2020,2,29)**for the 29^{th}of February, 2020. Problems may occur if dates are entered as text - the settlement date is the date a buyer purchases a coupon, such as a bond. The maturity date is the date when a coupon expires. For example, suppose a 30-year bond is issued on January 1, 2008, and is purchased by a buyer six months later. The issue date would be January 1, 2008, the settlement date would be July 1, 2008, and the maturity date would be January 1, 2038, 30 years after the January 1, 2008, issue date
**settlement**,**maturity**,**frequency**and**basis**are truncated to integers- if
**settlement**or**maturity**is not a valid date,**PRICE**returns the*#VALUE!*error value - if
**yield**< 0 or if**rate**< 0,**PRICE**returns the*#NUM!*value - if
**redemption**≤ 0,**PRICE**returns the*#NUM!*value - if
**frequency**is any number other than 1, 2, or 4,**PRICE**returns the*#NUM!*error value - if
**basis**< 0 or if**basis**> 4,**PRICE**returns the*#NUM!*error value - if
**settlement**≥**maturity**,**PRICE**returns the*#NUM!*error value.

There are two
computations used with this function.
When **N**, the number of coupons payable between the **settlement** date and the **redemption **date,
is greater than one [1], **PRICE** is calculated as follows:

where:

**DSC**= number of days from**settlement**to next coupon date**E**= number of days in coupon period in which the**settlement**date falls**A**= number of days from beginning of coupon period to**settlement**date.

When **N **is equal to one [1], **PRICE **is calculated as follows:

This assumes the same variables as above.

Please see my example below:

*We’ll
continue our A to Z of Excel Functions soon.
Keep checking back – there’s a new blog post every other business day.*

*A
full page of the function articles can be found **here**.*

* *