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Excel INTRATE Function

Excel INTRATE function
Summary 
The Excel INTRATE function returns the interest rate for a fully invested security.
Purpose 
Get interest rate for fully invested security
Return value 
Interest rate as percentage
Syntax 
=INTRATE (settlement, maturity, investment, redemption, [basis])
Arguments 
  • settlement - Settlement date of the security.
  • maturity - Maturity date of the security.
  • investment - The amount originally invested.
  • redemption - The amount received at maturity.
  • basis - [optional] Day count basis (see below, default =0).
Usage notes 

The INTRATE function calculates the annual effective interest rate for a "fully invested" security. A fully invested security does not pay periodic interest before maturity. The interest income is the difference between the redemption value of the security and the original investment.

Example

In the example shown, we want find the effective annual interest rate for a bond with a price of $895.00 and a redemption value of $1000. The settlement date is 6-Jul-2017 and the maturity date is 15-Jan-2020. There are no periodic interest payments, and the day count basis is US (NASD) 30/360. The formula in F5 is:

=INTRATE(C7,C8,C5,C9,C10)

With these inputs, the INTRATE function returns 4.65%, with percentage number format applied.

Entering dates

In Excel, dates are serial numbers. Generally, the best way to enter valid dates is to use cell references, as shown in the example. To enter valid dates directly inside a function, you can use the DATE function. To illustrate, the formula below has all values hardcoded, and the DATE function is used to supply each of the two required dates:

=INTRATE(DATE(2017,7,6),DATE(2020,1,15),895,1000,0)

Basis

The basis argument controls how days are counted. The INTRATE function allows 5 options (0-4) and defaults to zero, which specifies US 30/360 basis. This article on wikipedia provides a detailed explanation of available conventions.

Basis Day count
0 or omitted US (NASD) 30/360
1 Actual/actual
2 Actual/360
3 Actual/365
4 European 30/360

Notes

  • In Excel, dates are serial numbers
  • All dates, and basis, are truncated to integers.
  • If dates are invalid (i.e. not actually dates) INTRATE returns #VALUE!
  • INTRATE returns #NUM when:
    • settlement >= maturity
    • investment <= 0 or redemption <= 0
    • Basis is out-of-range

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