XL98: Basis Argument for Financial Functions

MORE INFORMATION

Basis is the type of day count basis as it relates to financial equations. The following is a list of Microsoft Excel financial functions that use a basis:

   ACCRINT()      COUPNUM()      ODDFPRICE()      PRICEDISC()
   ACCRINTM()     COUPPCD()      ODDFYIELD()      PRICEMAT()
   COUPDAYS()     DISC()         ODDLPRICE()      RECEIVED()
   COUPDAYSNC()   DURATION()     ODDLYIELD()      YIELD()
   COUPNCD()      MDURATION()    PRICE()          YIELDDISC()
				

The table below explains all five types of bases with examples for each type:

   Basis           Day count basis
   ------------------------------------

   0 or omitted    30/360
   1               Actual/Actual
   2               Actual/360
   3               Actual/365
   4               European Form 30/360
				

Basis 4 treats the end of February and the thirty-first of a month differently than the NASD (National Security Dealers) or SIA (Securities Industry Association).

Basis Types

0 or omitted Basis - 30/360 - This method uses 30 days a month for a total of 360 days a year. The yields of agencies are calculated on this basis. These agencies include Government-sponsored organizations that make up a range of Federal Banks, Loan Mortgage Banks. This method uses 180 days.

1 - Actual/Actual - This method is used by Treasuries (Backed by the U.S. Government, no risk investment) which means there are the actual number of days counted. This takes into account if there is a leap year. In reality there could be 365 or 366 days.

2 - Actual/360 - This method is similar to the Actual/Actual method shown above, but only has 360 days per year.

3 - Actual/365 - Same as above, but there are 365 days per year.

4 - European Form 30/360 - This is the European method for starting and ending dates that occur on the thirty-first of the month. For example: if the starting or ending date is the thirty-first of a month, it then becomes equal to the thirtieth of the same month.