## How to use the YIELD function

**What is the YIELD function?**

The YIELD function calculates the yield for a security that pays interest. The YIELD function is designed to calculate the bond yield.

**What is yield for a security that pays interest?**

Yield is the annual return earned on a security like a bond that makes periodic interest payments, calculated based on the security's annual coupon payments and current market price relative to face value.

**What is bond bond yield?**

Bond yield is the overall interest rate paid by a bond issuer that combines the bond's fixed coupon rate and the market-driven capital gains or losses based on whether the bond sells above or below par value prior to maturity.

### YIELD Function Syntax

YIELD(*settlement, maturity, rate, pr, redemption, frequency, [basis]*)

### YIELD Function Arguments

settlement |
Required. The security's settlement date which is the date after the issue date. |

maturity |
Required. The date when the security expires. |

rate |
Required. The security's annual coupon rate. |

pr |
Required. The security's price per $100 face value (par amount). |

redemption |
Required. The security's redemption value per $100 face value. |

frequency |
Required. The number of coupon payments per year. Annual payments, frequency = 1; semiannual, frequency = 2; quarterly, frequency = 4. |

[basis] |
Required. The Treasury bill's price per $100 face value (par amount). |

Basis |
Day count |

0 (default) |
US (NASD) 30/360 |

1 |
Actual/actual |

2 |
Actual/360 |

3 |
Actual/365 |

4 |
European 30/360 |

**What is bond maturity?**

Bond maturity is the date when a bond's term ends, at which point the issuer must repay the bond's par value and any final interest due to bondholders. A 30-year bond issued today will have a maturity date 30 years from now.

**What is the bond's settlement date?**

A bond's settlement date is the date when the trade is finalized and the bond is delivered to the buyer in exchange for payment to the seller. Settlement for US treasury bonds is usually T+1 day.

**What is the security's annual coupon rate?**

The annual coupon rate is the fixed annual interest rate the security pays based on the face value, stated at the time of issue, such as a 5% coupon paid yearly on a $1,000 bond resulting in $50 of interest annually.

**What is the security's redemption value per $100 face value?**

The redemption value per $100 face value is the amount the issuer must repay the investor per each $100 of the initial principal when the bond matures, typically $100.

**What is the number of coupon payments per year?**

The number of coupon payments per year is how many times annually the bond issuer pays interest to the bondholder, with typical frequencies being annual, semiannual, and quarterly payments.

### YIELD Function example 1

Formula in cell C6:

### YIELD Function example 2

Keep in mind to use theÂ DATE functionÂ if you enter dates in the function instead of using cell references.

For example,

Date arguments are truncated to integers.

### YIELD Function not working

The YIELD function returns:

- #VALUE! error ifÂ
*settlementÂ*or*Â maturityÂ*is not a valid data type. - #NUM! error if
*pr*Â <= 0 (zero)- redemption <= 0
- frequency <> 1, 2 or 4
- basis < 0 (zero)
- settlement >= maturity

### Functions in 'Financial' category

The YIELD function function is one of many functions in the 'Financial' category.

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