A to Z of Excel Functions: The PRICEMAT Function

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

The PRICEMAT 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 PRICEMAT function returns the price per $100 face value of a security that pays interest at maturity.

The PRICEMAT function employs the following syntax to operate:

The PRICEMAT function has the following arguments:

• settlement: this represents the security's settlement date.  The security settlement date is the date afterthe issue date when the security is traded to the buyer
• maturity: this is the security's maturity date, i.e. when the security expires
• issue: this is the security’s issue date, expressed as a serial date number
• rate: this denotes the security’s interest rate at date of issue
• yield: this denotes the security’s annual yield
• basis: the type of day count basis to use.  This is the only optional argument.  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, issue and basis are truncated to integers
• if settlement, maturityor issue is not a valid date, PRICEMAT returns the #VALUE! error value
• if rate < 0 or if yield < 0, PRICEMAT returns the #NUM! error value
• if basis < 0 or if basis > 4, PRICEMAT returns the #NUM! error value
• if settlement ≥ maturity, PRICEMAT returns the #NUM! error value.

PRICEMAT is calculated as follows:

where:

• DSM = number of days from settlement to maturity
• DIM = number of days from issue to maturity
• A = number of days from issue to settlement
• B = number of days in year, depending upon year basis.

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.