The DISC function in Google Sheets is a financial tool designed to evaluate the discount rate of a security given its price. It provides a quick way for users to analyze the yield of a security by assessing the relationship between its price and face value. This function is essential for investors and financial analysts who aim to make informed investment decisions based on current pricing.

Syntax

DISC(price, redemption, maturity) 

• price: The current price of the security.
• redemption: The redemption or face value of the security at maturity.
• maturity: The number of days until the security matures.

Example #1

DISC(950, 1000, 30) 

The function calculates the discount rate for a security priced at $950, redeemable at $1000 in 30 days. This could yield a discount rate of approximately 5.16%.

Example #2

DISC(850, 1000, 60) 

This calculates the discount rate for a security priced at $850, with a face value of $1000 maturing in 60 days. The result would be around 8.82%.

Example #3

DISC(720, 800, 45) 

This example evaluates the discount rate of a security priced at $720, redeemable at $800 in 45 days, resulting in a discount rate of approximately 11.11%.

Error handling

• VALUE!: Indicates an incorrect data type was provided for any of the parameters.
• NUM!: Signifies that the inputs for price, redemption, or maturity are not logically valid (e.g., price exceeding redemption).
• DIV/0!: Occurs when the maturity parameter is set to zero, as division by zero is undefined.

Conclusion

The DISC function is a valuable resource for those looking to compute the discount rate of securities efficiently. By understanding its parameters and functionality, users can leverage this tool to make sound financial decisions based on security pricing and valuation.