XL2000: Basis Argument for Financial Functions

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This article was previously published under Q214050

SUMMARY

This article describes the Basis argument and how it is evaluated in Microsoft Excel financial functions.

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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()
   COUPDAYBS()    DISC()         ODDLPRICE()      RECEIVED()
   COUPDAYS()     DURATION()     ODDLYIELD()      YIELD()
   COUPDAYSNC()   MDURATION()    PRICE()          YIELDDISC()   
   COUPNCD()

There are five types of basis in Microsoft Excel, including the European Basis 30/360.

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

NOTE: Basis 4 (European Form 30/360) treats the end of February and the thirty-first of a month differently than the 30/360 basis used by the National Security Dealers (NASD) or Securities Industry Association (SIA).

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Basis Types

Basis 0 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 and loan mortgage banks. This method uses 180 days.
Basis 1 is used by treasuries. The actual number of days is counted. This method takes leap years into account so there could be 365 or 366 days.
Basis 2 is similar to Basis 1, but only has 360 days per year.
Basis 3 is similar to Basis 1, but always has 365 days per year.
Basis 4 is the European method for starting and ending dates that occur on the 31st of the month. For example, if the starting or ending date is the 31st of a month, it then becomes equal to the thirtieth of the same month.

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REFERENCES

For more information about the Basis argument, click Microsoft Excel Help on the Help menu, type Yield in the Office Assistant or the Answer Wizard, and then click Search to view the topic.

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