The INTRATE function calculates the interest rate for a fully invested security. The function arguments are:
settlement |
is the settlement date of the security, expressed as a date code |
maturity |
is the maturity date of the security, expressed as a date code |
investment |
is the amount invested in the security |
redemption |
is the amount received at maturity |
basis |
is the type of day count basis used, where basis is one of the following: |
Basis |
Day count basis |
0 |
US 30/360 |
1 |
Actual/actual |
2 |
Actual/360 |
3 |
Actual/365 |
4 or omitted |
European 30/360 |
INTRATE is calculated using the formula:
[(redemption - investment)/investment] * B/DIM
where B is the number of days in a year according to the basis used and DIM is the number of days from settlement to maturity.
For example, you have been issued with a bond that comes to maturity on August 31st 1998, the settlement date is July 15th 1997, the amount invested in the security is $10,000, the redemption value is $10,100, and the day count basis is actual/actual. Using the formula
INTRATE(35625, 36037, 10000, 10450, 1)
returns an interest rate of 3.98665% for a fully invested security.
See also: